Memory Chip Stocks Start to Surge – With More Upside Ahead

The semiconductor chip shortage has led to a number of companies both rise and fall over the past few months. Now, memory-related chips are starting to see a strong rally, even holding its own as other tech stocks have dipped in the past few days.

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  • The move higher may continue, as analysts are starting to upgrade these companies on their strong potential in the next few quarters as well.

    One potential winner in the space is Micron (MU). The memory chip maker has just been upgraded thanks to rising demand for memory chips.

    The recent rally has finally brought the share return in-line with the S&P 500 index over the next year. With the company growing earnings at 175 percent over the past year and revenue up 37 percent, it’s likely that shares can continue to move far higher.

    Action to take: Shares yield a paltry 0.1 percent, so investors may want to pick up shares in anticipation of a move higher, not for any current or future income.

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  • With shares starting to move higher in recent sessions, traders may want to consider a short-term call option trade. The January $90 calls, last going for about $4.10, offer a leveraged upside to a further rally in shares.

     

    Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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