Diamonds and Dogs

5/22/18

Cash is king. Micron Technology (MU) is up 7% not far from a 52 week high following a bullish analyst meeting. The DRAM chipmaker raised guidance for the quarter, announced a strategic relationship with Intel for 3D NAND technology, but the big news was a $10 billion share buyback plan. As one analyst put it, the buyback is a big vote of confidence in the strength of Micron's business model. The buyback accounts for 14% of their market cap and the company went on to say they will also return 50% of their cash flow to shareholders going forward. This could create a dividend with a yield over 2%. Not bad.

AutoZone (AZO) down 7% following earnings. The car part retailer is taking a hit even though AutoZone blew past profit estimates for the first quarter. Earnings were boosted by the tax revamp that was signed into law in December. AutoZone is also optimistic about our prospects for the current quarter following the severe winter. The very cold, wet spring through March and much of April caused a sales slump. Investors don't seem to be too optimistic about a rebound in sales.