You can define a “cheap stock” in many ways, but there’s nothing quite as classic as a growth stock changing hands at a low valuation ratio. With that in mind, I highly recommend taking a closer look at freelance services platform Fiverr (NYSE: FVRR) and memory-chip giant Micron Technology (NASDAQ: MU) right now. Their stocks look deeply undervalued.
Micron: A cyclical upswing
The tech sector runs in wide, sweeping cycles. A market-boosting upswing almost always makes middle-market suppliers too optimistic about the long-term bull market for their wares that might be forming. In many cases, they wind up left with overstuffed component inventories when high demand fades out quicker than expected. Then everyone gets caught by surprise by the next boom. Demand surges, and the market realizes that the prior bust’s excess supply has all been sold or rendered obsolete, and in the meantime, none of the hardware providers have built any factories since that last cyclical industry downturn started. Then manufacturers have to play catch-up to boost capacity so that they can meet the fresh wave of reignited demand.
That’s life in the memory chip sector, where Micron plies its trade. Right now, the industry faces soaring product demand because every piece of the artificial intelligence (AI) puzzle requires a ton of high-speed memory chips. As it happens, the aftershocks of the coronavirus crisis and flooding disasters in Taiwan left the largest memory makers woefully unprepared to meet this surge in demand.
But the upswing is happening, and I don’t see how it could be stopped. From smartphones and PC systems to data center servers and technology-packed cars, the devices around us are screaming for more memory chips. So Micron is ramping up its in-house manufacturing capacity with a multibillion-dollar construction push in 2025.
Micron’s chip production and top-line sales are trending up after a heavy crunch in 2022 and 2023. Cash profits and net income are following suit. But it’s unprofitable right now, in terms of earnings per share. As a result, Micron stock might look…
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