Yesterday (December 22), I appeared on CNBC’s “Trading Nation” with anchor Seema Mody. I recommended Micron (MU, $70.44) even though that was my pick when I was on the show a month or so before. Since then, the stock has popped from $45 to $70. I think that with the major memory chip vendors disciplined with their production, and with the voracious storage demand coming from 5G wireless, that this company can earn $12 per share again over the next few years in the next industry upcycle. To put this in perspective, MU earned $3 per share last year.
I also recommended shorting DoorDash (DASH, $156.79). I don’t think that this recent scorching IPO can hold its value. A money-losing food delivery company with no true competitive advantage shouldn’t trade for 20 times sales when the shares of the best, highly profitable software companies trade for 10 times. Also, particularly as deliveries slow after COVID, I bet that DASH won’t be able to continue to steal 20% per delivery from restaurants. Watch out below! We’ll see if I’m right.
Last, I made/make the call that tech will outperform yet again in 2021 after the “revenge if the nerds” rotation into value/cyclical stocks peters out before next summer. Growth/tech stocks do relatively well in a low-interest rate, low growth, low inflation environment & that’s what I see. The only piece of this puzzle in which I may be wrong is the subdued inflation. Again, let’s check in a year from now.
Note that I own MU, as do my clients at Independent Solutions Wealth Management as well as our Wireless Fund (WIREX) shareholders. We’ve no DASH positions.