Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.

Micron Technology

The link between market trends and supply chain disruptions is inextricable, as demonstrated by Micron’s earnings report last week.

What’s more, the bullwhip effect is in full blast. When demand is strong, retailers over-order from manufacturers, who in turn over-order from their supplies. Ultimately, this leads to inventories that are severely skewed away from actual consumer demand.   

Whilst Micron’s earnings report started positively with strong profitability and free cash flow, its stock remained stagnant. Investors should consider the decrease in industry demand, as well as the change in market conditions, before completely writing off Micron as a prospect.

However, research firm Gartner predicts worldwide PC shipments could decline by 9.5% this year. If true, the company’s attempt to clear some of its excess inventory will prove challenging.

Looking ahead, concerns around a recession are likely to see investors exercise more caution. As a company, Micron will have to navigate these concerns, as well as look at how to rebuild its stock price which has nearly halved this year.

Luckily, the strong employment landscape is likely to help cushion the severity of any upcoming recession. 

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Not investment advice. Past performance does not guarantee or predict future performance.