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Pricing for Memory Chips May Be Declining
Micron Technologies’ forward price-to-earnings ratio is 12. It makes it one of the cheapest large technology companies on the market. But that discount could be well deserved.
Micron makes memory chips used in smartphones, computers, and other devices. That is a highly cyclical area of the global semiconductor industry.
Micron’s revenues and profits are highly sensitive to pricing and volumes in the memory market—which is out of the company’s control.
Unfortunately for Micron, there are signs that pricing for memory chips may be heading lower in the near future. Expect that to be a hot topic on today’s earnings call.
Electric and Alternative Fuel Companies Are This Summer’s Hottest Stocks
It could take only 335 trucks using renewable natural gas to eliminate a million metric tons of carbon dioxide over their lifetimes. Renewable natural gas, or RNG, refers to gas generated from sources such as landfills, not from taking it out of the ground.
Burning RNG is theoretically “carbon negative” because the CO2 that is released is less damaging to the atmosphere than methane just floating away.
Some of this year’s hottest stocks are electric or alternative-fuel transportation businesses. Think of Tesla, Nikola, and NIO. Investors will soon have one more way to play the trend.
Texas-based Hyliion is developing an all-electric drive system for heavy-duty trucks that is powered by a natural gas generator that could use RNG. It plans to merge with Tortoise Acquisition Corp., a special-purpose acquisition company, by the fall.
Convertible Bonds Issued Clears 2019’s Total
The total issuance of convertible bonds in the U.S. is $67 billion so far this year. It is already more than 2019’s total. Companies have rushed to raise cash during the coronavirus crisis, and convertibles have been a popular way to do so this year.
Issuance isn’t slowing down. Last week, PG&E, American Airlines Group, and T-Mobile US all sold new convertible issues.
The bonds have been good to investors, too. Convertibles offer the yield and safety of a bond—but with the upside potential of a stock if the company does well. They act like a regular bond until the company’s stock rises to a certain price. Then the securities can be converted to equity.
That is an attractive balance in today’s market. As an asset class, convertible bonds have beaten stocks this year, returning over 6%.
Numbers by Barron’s is our daily podcast. Find out morehere.
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com
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June 29, 2020 at 04:00PM
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Why Alternative Fuel Stocks Are On Fire - Barron's
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