Ticker Reports for February 12th
3 Reasons Micron Stock Is Deeply Undervalued Right Now
Micron’s (NASDAQ: MU) share price is wallowing at long-term lows and is deeply undervalued. It is undervalued because of its industry placement, growth outlook, and stock price, a measly 14x earnings. The growth outlook is robust, and the P/E will fall to only 8x next year, suggesting a minimum of 75% upside is possible. This is a look at why.
1) Micron’s AI Business Is Booming
Micron returned to top-line growth early in 2024 as its AI business accelerated and legacy segments normalized. The growth accelerated sequentially for the next three quarters, with Q1 2025 growth slowing to only 85% but still solid and up significantly compared to the prior year. The primary driver is the data center segment, which grew 400% year-over-year on a sequential doubling in HBM shipments. HBM, specifically HBM3E, is the critical factor. It is the memory of choice for AI and accelerated computing, and Micron is the performance leader, providing better capacity with lower power consumption.
The HBM3E market is growing rapidly. The HBM memory industry grew by roughly 200% in 2024 and is expected to double in 2025. Eighty percent of the market is HBM3E. Micron’s CEO has forecasted that the HBM market will grow 4x from its 2024 levels by 2028, suggesting that three years of solid growth lie ahead for this business. After that, Micron’s business will remain solid and likely continue to grow, with the AI shift benefiting the mobile, PC, and automotive semiconductor markets.
Expanding capacity will aid the boom. Micron received over $6 billion in funding from the CHIPs Act to facilitate expansion projects domestically, and international projects are underway. The India-based manufacturing facility is expected to commence operations in Phase I this year, and plans for Phase II are moving forward.
2) Is Micron the Most Downgraded Stock? Seriously?
Micron is ranked on MarketBeat’s list of Most Downgraded Stocks, but take that news with a grain of salt. The ranking is due to numerous price target reductions since the FQ1 2025/CQ4 2024 results were released, but nothing is bearish in the data.
The 26 analysts' MarketBeat tracks with current ratings show a high conviction in their Moderate Buy rating and forecast a 45% upside for the stock price. The strength of conviction is seen in the number of analysts rating at Buy or higher, about 88%, and the price targets. The latest round of activity included numerous price target reductions but to levels that align with the consensus; consensus is near $135 and 45% above mid-February trading.
The cash flow and balance are reasons why analysts like this stock. The company’s balance sheet is a fortress with a total liability of about 0.5x equity and equity on the rise. The balance sheet and cash flow allow for opportunistic acquisition and investment while paying dividends and buying back shares.
3) The Technical Outlook: Micron Is Well-Supported Near $90
Micron’s stock price is having difficulty gaining traction but is unlikely to fall further than it has in the last twelve months. The market is deeply undervalued at these levels and shows solid support at the $90 level. Support is due primarily to the institutions, which own about 80% of the stock and have been buying in the range's low end. With this in play, it will only take a positive news cycle to get the market in gear, which could come with the Q2 results.
The analysts forecast a solid quarter with 36% top-line growth and broader margins but have set the bar low. 95% of revisions tracked by MarketBeat include lowered price targets, setting the company up to outperform. With NVIDIA’s (NASDAQ: NVDA) Blackwell ramped to full production and production capacity expanding, Micron could outperform by a wide margin.
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Buy NVDA Now?
After weeks of volatility, did President Trump just turn Nvidia (NVDA) into a raging BUY?
The beloved chipmaker has struggled this year, facing increased competition and regulatory pressure.
Will the Tariff Bump Lead to a Steel Trap?
President Trump's recent tariff announcement on steel and aluminum imports has sparked a stock market rally among domestic metal producers, including Cleveland-Cliffs (NYSE: CLF), Nucor Corporation (NYSE: NUE) and Alcoa Corporation (NYSE: AA). Investor optimism regarding reduced foreign competition has fueled these gains. However, it is crucial to determine whether these initial surges represent a lasting uptrend or a temporary "tariff bump," masking deeper economic concerns. The key question for investors is whether the promise of tariff-driven profits represents a genuine opportunity or a potential "steel trap" with long-term risks outweighing short-term gains.
The "Tariff Bump": Immediate Opportunity for Steel
The US government's decision to impose a 25% tariff on all steel and aluminum imports was greeted with a bullish market response due to its potential to transform the industry's competitive landscape. The tariffs aim to make domestically produced steel more price-competitive within the US market by increasing the cost of imported steel, theoretically leading to immediate benefits for American steel companies.
Domestic steel producers anticipate a surge in demand as buyers turn to local sources to avoid the increased costs associated with imports. This demand shift allows these companies to raise prices for their products, directly boosting revenue and profit margins. For corporations like Cleveland-Cliffs and Nucor, which operate significant steel production facilities within the United States, this tariff-induced environment is a clear win in the short term.
Cleveland-Cliffs Inc. is a bellwether of the domestic steel industry. Following the tariff announcement, the company's stock price jumped approximately 17% on February 10th, 2025. CEO Lourenco Goncalves has been vocal in his support of tariffs, articulating a vision of a "manufacturing renaissance" for America driven by such trade policies. As a vertically integrated producer, Cleveland-Cliffs is positioned to capitalize on increased demand across the steel production chain, from iron ore supply to finished steel products.
Nucor Corporation's stock price also increased, rising around 6% on February 10th. Nucor, known for its efficient electric arc furnace (EAF) technology, stands to gain from a market where imported steel is less competitive.
Similarly, Alcoa Corporation’s stock price rose around 2% in response to the proposed aluminum tariffs. Analyst consensus ratings for Cleveland-Cliffs, Nucor, and Alcoa reflect a cautiously optimistic outlook, with average price targets suggesting upside from pre-tariff announcement levels on all three stocks. These initial market reactions and analyst sentiments underscore the perceived opportunity for US metal producers in the wake of tariff implementation.
The Trapdoor Opens: The Hidden Costs of Steel Tariffs
While tariffs on imported steel and aluminum may initially appear to benefit domestic producers, a comprehensive analysis reveals hidden risks and potential long-term economic repercussions that could undermine these gains. The "steel trap" metaphor aptly illustrates the unintended adverse effects that these tariffs can have on the broader economy.
One of the most immediate concerns is the inflationary pressure tariffs exert on downstream industries. Sectors heavily reliant on steel and aluminum as raw materials, such as automotive, construction, manufacturing, and beverage industries, face increased input costs. These increased costs can be passed on to consumers in the form of higher prices for goods ranging from automobiles and homes to canned beverages and appliances, contributing to overall inflation within the economy.
The automotive industry, such as Ford Motor Company (NYSE: F), heavily relies on steel for vehicle production. As steel prices rise, so do production costs for automakers like Ford. This can negatively impact the company's profitability and affordability for consumers. Ford's CEO has previously emphasized the financial burden of steel tariffs, referring to them as a source of "cost and chaos." This illustrates the tangible financial strain such policies can place on companies that rely on steel.
The construction and homebuilding sectors, represented by companies like Home Depot (NYSE: HD) and Lowe's (NYSE: LOW), also face significant headwinds. Steel is essential for construction materials like rebar and structural beams. Higher steel prices directly increase the cost of building homes and infrastructure projects, potentially dampening construction activity and exacerbating housing affordability challenges. Industry associations have warned that steel tariffs directly contradict efforts to make housing more affordable, ultimately burdening consumers with higher home prices.
Manufacturing and industrial goods producers, such as Caterpillar Inc. (NYSE: CAT), are similarly vulnerable. Steel and aluminum are fundamental inputs for a vast array of manufactured goods, from heavy machinery to industrial components. Increased material costs erode the competitiveness of US manufacturers, potentially hindering investment and job creation in these sectors as companies struggle with higher production expenses compared to international competitors operating in tariff-free environments.
Even the beverage industry, represented by Coca-Cola (NYSE: KO) and PepsiCo (NASDAQ: PEP), is not immune. Aluminum, critical for beverage cans, becomes more expensive due to tariffs. These seemingly incremental cost increases, when multiplied across the vast scale of beverage production, can translate into significant financial burdens for these companies, potentially leading to higher prices for everyday consumer goods. Historical data from the 2018 aluminum tariffs illustrates this point, with the policy adding an estimated half a billion dollars to beverage production costs.
Steel tariffs risk trade retaliation from other countries, potentially harming multiple sectors beyond steel. They can also distort global steel markets and hinder long-term innovation within the domestic steel industry. The initial gains for steel producers from tariffs may be short-lived and lead to broader economic damage in the long run.
Opportunity or Mirage? The Steel Tariff Verdict
The "tariff bump" experienced by steel and aluminum stocks following President Trump's tariff announcement presents a complex picture for investors. While domestic steel producers like Cleveland-Cliffs and Nucor may indeed experience a short-term surge in demand and profitability, the long-term sustainability of these gains is far from assured. The potential for inflationary pressures, harm to downstream industries, and trade retaliation casts a long shadow over the initial market euphoria.
While the "bump" is real in its immediate market impact, the significant long-term risks suggest that it may indeed be a "trap" for investors who focus solely on the initial gains without considering the broader economic context. Therefore, a balanced and cautious approach is warranted. Investors should carefully weigh the potential short-term benefits for domestic steel producers against the significant long-term risks and possible negative consequences for the broader economy. The initial surge in steel stocks may represent an opportunity for traders. However, for long-term investors, acknowledging the potential "steel trap" is likely to be the more prudent course of action.
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Do this Before Elon's Reveal on April 23rd
Elon's newest tech could pay you an extra $30,000 a year — while you sleep.
It's smaller than a quarter but designed to power a $9 trillion AI revolution.
And I've identified a little-known supplier Elon is depending on to make it all happen.
Rebuilding Stronger: 3 Stocks Driving Infrastructure Recovery
The Los Angeles wildfires are estimated to have caused between $95 billion to $164 billion in property damage, with insured losses reaching $75 billion. The cleanup and rebuilding effort will take years. Newsweek reports that developers want to “Turbocharge” building efforts. California’s endless red tape when it comes to building permits has been a bottleneck for years. Governor Gavin Newsom has assured residents that he will suspend the California Environmental Quality Act and the California Coastal Act so rebuilding can happen quickly. Here are three stocks that will gain from the rebuilding efforts.
Caterpillar: Heavy Machinery Is a Given
As the leading construction sector manufacturer of construction and mining equipment, Caterpillar Inc. (NYSE: CAT) builds the heavy machinery required for reconstruction and development. From bulldozers, loaders, and compactors to excavators, Caterpillar’s heavy machinery is indispensable. The rebuilding efforts would provide a much-needed bump for its business after a slow 2024.
A Soft 2024 Leaves Little Optimism For 2025
Construction in the United States is believed to have peaked and is still in the normalization phase.
The U.S. manufacturing PMI continues to stay below 50 as building permits remain relatively low. Caterpillar posted the fourth quarter of 2024 EPS of $5.14, beating consensus estimates by 12 cents. However, revenues fell 5.1% YoY, $16.2 billion, missing consensus estimates of $16.61 billion.
Its construction segment revenues fell 8% YoY to $6 billion. The resources segment experienced a 9% YoY decrease to $2.96 billion.
Energy and transportation revenue was flat at $7.65 billion. Full-year 2024 sales were down 3%YoY to $64.8 billion, primarily from lower sales of equipment to end users.
Deere: Landscaping and Preparation for the Rebuilding Equipment
Similar to the role of Caterpillar, Deere & Company Inc. (NYSE: DE) would also use its agricultural and construction equipment during the cleanup and rebuilding process. Deere’s bulldozers, skid steers, and excavators are essential for removing burned trees and vegetation and clearing debris to prepare the land for rebuilding. Deere’s forestry equipment can be used to remove hazardous trees, salvage timber, and replant forests.
Double-Digit Drops Across the Board, But Still Profitable
Deere posted Q4 2024 EPS of $4.55, firmly beat consensus analyst estimates by 68 cents. However, revenues plunged 32.8% YoY to $9.28 billion, beating $9.20 billion consensus estimates.
Full-year 2024 metrics were very gloomy on a YoY basis. Full-year revenues fell 16% YoY to $51.72 billion. Equipment net sales fell 19% YoY to $44.76 billion. Net income fell 30% YoY to $7.1 billion. Diluted EPS fell 26% YoY to $25.62. The company's margins improved by 700 bps since 2020, reaching over 18%, demonstrating solid fiscal discipline. Demand levels peaked in 2023 as headwinds developed through 2024. But Deere anticipated and managed accordingly.
IR Director Josh Beal commented, “Overall, the decisive actions we took this year resulted in a solid finish. We closed the fiscal year 2024, delivering strong returns while successfully reducing new field inventory levels, ultimately positioning the business to effectively execute what are expected to be challenging market conditions in 2025.”
Fluor: Disaster Engineers to Manage Mass Rebuilding Efforts
The name may not sound familiar, but the disasters that played a significant role during the reconstruction were Hurricane Katrina, Hurricane Maria, Hurricane Rita, and rebuilding after the Iraqi War. Fluor Co. (NYSE: FLR) is a global engineering, procuring, and construction (EPC) firm providing energy, mission, and urban solutions worldwide. They were recently selected by the U.S. Federal Emergency Management Agency (FEMA) to provide recovery services for the East Zone for four one-year periods valued up to $525.6 million.
Uncertain Outlook for 2025 Due to Market Uncertainty
Fluor reported Q3 2024 EPS of 51 cents, missing consensus estimates by 25 cents. Revenues rose 3.31% to $4.09 billion but still missed consensus estimates by $664.08 million.
The company won $2.7 billion in awards in the quarter for an ending consolidated backlog of $31.3 billion, up from $26 billion in the year-ago period. Earnings came in less than expected due to certain project delays and cancellations.
Fluor CEO David Constable didn’t inspire much confidence when they pulled forward guidance, “We are not providing forward-looking guidance for U.S. GAAP net earnings or U.S. GAAP earnings per share, or a quantitative reconciliation of adjusted EBITDA or adjusted EPS guidance, because we are unable to predict with reasonable certainty all of the components required to provide such reconciliation without unreasonable efforts,”
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
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