Diamonds and Dogs

1/7/20

Micron Technology (MU) trading at a new recent high.The DRAM chipmaker is up 6% to a one and half year high on an upgrade. The analyst at Cowen believes DRAM fundamentals may improve earlier than expected and raised his price target to $70 from $50. Demand is coming from a server upgrade cycle and 5G smartphone adoption that is driving upwards of 50% content increases in premium tier handsets. Micron's stock has soared 29.5% over the past three months, while the chip sector index has rallied 19.7% and the S&P 500 has gained 10.4%.

Profit-taking in the oil space. Chevron (CVX) is down 2% on a downgrade to Underperform from Bank of America/Merrill Lynch. The stock has gone nowhere in the last year. In an interview on CNBC, the CEO said they do not have significant operations in Iraq, but company is still operating there. Here is an interesting stat, for every $1 price increase in oil, the company will add another $450 million in cash flow. With a 4% dividend yield, the major oil companies are acting more like utility stocks.