NVDA - Micron Stock: After Nearly Doubling It's Time To Take Profits (Technical Analysis)

2024-03-13 16:28:48 ET

Summary

• Micron Technology, Inc. is a high-quality cyclical business that has provided good returns for me during past cycles.
• The current Micron cycle has been similar to the one in 2018-19, and Micron stock is now trading near all-time highs.
• Micron has performed well, doubling the return of the S&P 500, and I have taken profits, completing a second successful Micron investment.
• I share why my process has worked well with Micron, and I share the results of the strategy with AMD and Nvidia stock as well to provide additional context.

Introduction

Successfully investing in individual stocks and achieving alpha requires at least two important things, in the words of well-known investor Howard Marks, an investor must be both contrarian and correct. This means that a successful investing process can't be the same as too many other market participants. The process needs to be unique. This is why over time I have developed my own investing strategies that are quite different than most other investors. However, it is not sufficient to have a unique strategy. The strategy must also be successful, and preferably be repeatable. Anyone who is a good storyteller can make up a story about how a particular stock or business will be successful in the future, but it's ultimately the results , over time, that tell the true story. Results can provide evidence about whether an investing technique (particularly a contrarian one) has a high likelihood of being successful.

I have a contrarian approach to investing in deep cyclical stocks. This article will share some of the results of that approach so readers can see there is some evidence that this approach works. Then I will explain the strategy using Micron Technology, Inc. ( MU ) as a recent individual example. After that, I will zoom out and look at the bigger strategic picture, examining the outcomes of two other semiconductor stocks I covered in 2022 around the same time, which had different outcomes: Advanced Micro Devices ( AMD ), and Nvidia ( NVDA ). Taking this approach should allow readers to see some evidence that the strategy can produce good results at the individual level, but also important considerations at the portfolio level. In this way, hopefully, I can provide a well-rounded explanation of both the benefits and the drawbacks of the deep cyclical strategy I'm presenting.

I have a long history of investing in Micron stock and sharing various stages of my cyclical investment strategy on Seeking Alpha. My first Micron article was published in 2018. I've written seven articles about my investments in Micron since then. The first four articles took readers through the entire researching, buying, holding, and selling process. In September 2018, I shared ahead of time the price I was aiming to potentially buy Micron stock in my article " Here's The Price I'll Start Buying Micron ." The following month, Micron fell to those levels and I bought the stock, which I shared in my article " I'm Buying Micron (Even If It's Not Different This Time) " A little over a year later, I finished the Micron series with an article titled " Profiting From Micron's Cycles: A Case Study " where I ultimately took profits on 12/31/2019 and shared my process along with the results....

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