99% of You Will Miss This Memory Stock Dip

This week's dip in some of the best performing stocks in the market could be very memorable for your portfolio. Joining us today is market beat analyst [music] Thomas Hughes with a look at three memory stocks that are all dipping right now, but he says are still a really solid buying opportunity. Thomas, I'm excited to get into this conversation today because I think some investors are starting to panic a little bit with some of the the deep losses that we're seeing in stocks that have previously pretty much only gone up and to the right. The depth of the the pullback in memory stocks right now is alarming. It's very large. I think that Micron is down more than 30% right now. But you got to look back at the past history and see that these stocks are up as you said very much in the last year and two years. So this pullback is really a small a small small pullback market mechanic giving up some profits profit taking locking in those gains ahead of what's going to be a very good year. I think again there's also a catalyst in play that kind of triggered some selling uh this current week. And uh to me I think that is just opening up a buying opportunity. >> Yeah, we're going to get into that buying opportunity on three of the names that I know you are saying are some of the best opportunities in memory right now. Before that, I want to talk about just this fundamental versus market reaction. Fundamentally, has anything changed in the the memory story in the last week that would have triggered this big sell-off that we're seeing? Or is this really just a reaction to price action? Well, so this week's specific catalyst is um a South Korean investment firm has lowered its target for SKH Heinik's Q2 sales. And so they've lowered their target not because of demand, but because of fixed price contracts. And fixed price contracts just will limit SKH Heinik's ability to capitalize on the surging demand, surging prices moving forward. Doesn't change the outlook at all. Just kind of raises some concerns about the the profit forecast. But now to offset this, SKH Highix has already said that they're starting to move away from those fixed price contracts and they've removed caps on some of the ones that already exist. So to me, those concerns are moot and any selling based on those concerns is really irrational because the market for HBM is so ridiculously hot right now. Prices are rising, demand is rising. SK Heinix itself, it CEO said that the shortages are going to last longer than expected through 2028. I think it could be longer than that because demand is just that hot. >> Yeah, we have a lot more of those fundamentals to dive into. But what I'm hearing is essentially the fundamental uh demand is still very much there. The story for why memory stocks have grown so much already hasn't changed. It's still there and yet their stock price is absolutely changing right now. I know you already mentioned some of that change could be just some profit taking. So, I want to talk about that a little bit and what that might say about overall market fears or economic sentiment right now. If people have been holding MU and seeing it grow and grow and grow, why sell now? What would have triggered selling at this point? And what does that say about how maybe people are feeling in the market right now? >> Well, right now the price action is really disconnected from the fundamentals. Fundamentally, these stocks are looking towards many years of growth. I just saw a forecast suggesting that HBM prices could double to next year, which really amplifies this outlook even more. So, right now, really what we're seeing is just natural market mechanics of um give and take, profit taking, fear and greed, some of these stocks, SanDisk, up quadruple digits over the last year. I mean, that's some ridiculous profits. People that don't take money off the table in the face of those kind of profits are really acting kind of foolishly. I mean, not to say that these stocks aren't going to keep going higher, but you need to trim profits because they can disappear that fast. And just look at this week's correction. You know, down 35%. It's a big loss. You know, you still have profits based on last year, but based on what the profits were, it is a big loss. So, you know, definitely want to be periodically taking profits. And that's I think is what's happening with these markets is just they've been elevated so much over the last few years. We have catalyst coming up this year to drive them higher. We just have participants selling, taking profits, repositioning, making smart moves for themselves in their portfolios and getting ready for the next run. >> Yeah. Not just investors taking profits. We also see plenty of insiders who will take profits when a stock has seen uh such a colossal runup. And I'm not saying that's the case with all of these memory stocks. But I know that at some point when a stock is having a tremendous runup, every kind of stockholder is going to take some profits at the table sometime or another, which is a wise decision to make. Also just wanted to note it is important to pay attention to what the institutions are doing as far as taking some of those profits while some taking of profits is a good thing. Too much can be a red flag or a signal. And I know you wrote a report recently on 12 stocks that corporate insiders are bailing out of right now. And these ones are are true red flags of insider selling and corporate selling. So if you want to check out that report and look at those names, you can scan the QR code or click the link in the description to get that report for free right now on marketbeat.com. Again, this is one of Thomas' special reports detailing 12 stocks that corporate insiders are abandoning. All right, Thomas, let's get back to the memory stocks. Again, not saying that insiders are selling here, but there's a lot to dive into on the three names that you have for our viewers today. And these are three names in memory that you say with this downturn is a great buying opportunity. What is the biggest buying opportunity for you in the memory space right now? >> I think that's Micron. Micron is really well positioned to really accelerate its growth. It is the second tier player in HBM. SKH Highix is the largest player with about 60% market share. But Micron is working hard to snag more share. It's also expanding its reach into other markets aside from Nvidia, all of the second tier AI AI operators. So, it's really well positioned to be boosting its growth. It's also investing in expansion, capacity expansions, and those will be taking hold next year. >> A lot of what you just said absolutely came up in their earnings report, and that was just a few weeks ago. That's when we saw that big new high for the stock. Investors uh saw this report. It was a good one, and we'll dive into that here in a second. But it's so interesting to me to to watch the price action on the chart that follows that earnings report perfectly. We saw that big runup after earnings because it was such a good report. And then this slow 30% decline has been after this really solid earnings report that came out at the end of June. So why is that? There was a lot of good in that report. >> Well, right. Well, that's what we call a sell the news event. That huge run up last year before the release was just the expectation for this good report. The good report totally affirmed that outlook. Profit taking set in. But again within this the trend is still up. The market is still bullish. Micron is still growing. Uh right now the fundamentals are still very strong for the company. I see it continuing to outperform in the upcoming quarters and and underpin a stock price rally. >> Yeah, the rally has been real for most investors. I know this is not the first time talking about MU. We've been talking about this stock a lot over the past year and it's the only stock that actually shows up on my bridges buy list twice. This is my paper trading watch list on marketbeat.com. You can scan the QR code or click the link in the description if you haven't checked this out yet. But I have MU on here twice and it is my number one performing stock. I added it in late December uh only about a month after I started this watch list and it has gone up over 200% even with this pullback in the last couple of weeks. So this has been such a huge gainer for investors. I added it again in February and that purchase is still up 120% roughly today. And so I think that we have to talk about even though yes, we are seeing a pullback in these names. They're still up tremendously. Is it a good thing or a healthy thing to be seeing a pullback in Micron right now? >> Oh, it is absolutely uh market has conditions called overbought, oversold. When too many people are buying, there's just nobody left to buy. price gets pushed up to levels where nobody wants to buy anymore and so that leaves it open to short sellers and profit taking. Uh those sellers will bring the price back down to levels that are more attractive and then that will re-engage the market and we'll see the stock price start moving higher again. Uh now the thing for market watchers and chart watchers just is to watch those peaks and troughs and to match them with the fundamental story and right now the peaks and troughs are progressively higher which is an uptrend and the fundamental story supports the uptrend and suggest that it will continue. uh it's always impossible to truly predict any price movements and we we talk often about timing the market being basically have a crystal ball because that's the only way you can really do that. But let's talk about your thoughts on how long this pullback could last. I think investors wanting to add MU on the dip are worried could this be a software story where we added a dip and the dip just kept dipping. Do you think that that is at all possible for MU or the other names in memory we're going to talk about or is the story here just different enough fundamentally that this downturn can't last much longer? >> Well, I think the story is fundamentally different. Uh software stocks are not AI enablers. They're AI users. Uh Micron's an AI enabler critical to the to the ecosystem. Uh so I think that the downtrend will have a bottom. I think the bottom is close at hand. Um there is a catalyst emerging right now. We're on the cusp of peak Q2 earnings reporting season, which I think will bring lots of strong, solid reports from all the AI infrastructure companies, the other enablers. That just affirms demand for the product, the revenue spending cycle, the profitability forecast, and and keep the market in its bullish posture, >> right? All of those big tech companies that are going to be reporting are some of MU's customers, and we're going to see how much they are investing into companies like MU for this buildout. So, I agree. I think that that big tech earnings reports coming out again just a few weeks from now could be a good catalyst to turn the stock uh back to the to the positive side. I think that could be true for all of the names we're talking about on this list. So, let's get to that second company that you're looking at. Again, another one that's had just tremendous growth this year. >> That's SanDisk. SanDisk is a memory story. It's different than than Micron. It's a different kind of memory. Micron is HBM and that's the uh the volatile memory that's attached to the actual GPUs. It's what they use to store the massive amounts of data for doing the training runs. Uh but where does that data come from and where does it get stored when it's not being used? And that's where SanDisk comes into play. SanDisk used to be a consumer story selling flash drives. But now it's emerged as an absolutely missionritical AI infrastructure story because you have to have nonfolatile permanent storage for memory so that when the power gets turned off it's still there and that's what SanDisk does. All these data centers that are using all these HBM stacks to power their their computing are also relying on equally large amounts of SanDisk products to maintain data integrity and data volume uh during downtimes. Yeah, there's so much demand for this company and that clearly shows up in the stock price even after dropping uh roughly 30% in a month. This stock is still up a mindblowing 3,200% in the last year. I I just feel like we never see stats like that. Let's talk about for a second. Just take a minute to recognize how unique and rare that is to see a stock grow that rapidly. >> Um it is pretty unique. Uh what this is an example of is is a company that had gained traction. Um, this is a company, a legacy company that had this legacy business which was, you know, kind of humrum, didn't make tons of money, but there it was. It's experienced an existential shift. Um, it's it's business is completely different than it was. It's now it's a now a new company. Um, stories that are kind of similar to this would be like Microsoft and Oracle who were legacy tech companies and made the shift to the cloud in a timely fashion and set themselves up to become AI stories. So, to me, this is uh this is a gamecher for SanDisk and its investors. uh this this company will be strong for some time into the future and within that I see you know cash flow and capital returns becoming part of the story very quickly >> yeah again the fundamentals here haven't changed the demand is still absolutely there for their the product and that big pivot that they made to supporting the AI infrastructure buildout is there a timeline on when this company and again it's hard not to talk about just this specific one but all three of the names we're talking about today will start to see their growth slow down I think that's another fear the market can have is that this Explosive growth can't last forever. So when do you think that slowdown could come in memory stocks? >> I think it will be quite a few years because right now all these data center contracts most of them are backended looking forwards to Vera Rubin product MI450 product that are not available yet. So many of these data centers will be built next year, the year after, the year after that. And then we haven't even really begun to talk about like uh the inference boom. We need more data centers for inference. So there's going to be more demand based on that and so I think that this will this will last for quite some time. >> Yeah. Uh let's talk about the entry point right now. Is this pullback enough for investors to be interested in adding more if they already own it or to maybe get in for the first time? Is this the pullback you've been waiting for or maybe wait and see how much further it could fall? >> It is the pullback that we've been waiting for, but it does look like the market could continue to fall. Within that, I will say that the the analysts are very very bullish on this market. Wedbush just recently raised its price target and said that they believe management has underestimated their own strength. They believe that results are going to be much stronger than expected and uh to me that will be quite a catalyst for the market. I mean you look at the chart you can see that the technical indicators are pretty strong as well. We've got convergence in the MACD that tells me that this market will at least retest its recent high when it rebounds and more than likely continue moving higher to set fresh highs after that. I think that web push analyst prediction is very interesting that the company doesn't even understand their own value which would be a wild scenario to play out and again I agree with you a massive catalyst for the stock if that does play out in their earnings which we are expecting a new report here in the next couple of weeks I think the first week of August SanDisk reports and I I want to go back and look at their most recent quarter this earnings report is wild the beat on expectations they have is out of control is it possible we could another beat like that quarter after quarter. >> Oh yeah. Oh yeah. These late latest results just show how the market misunderstood or or or just didn't comprehend the need for this product. Um this is really showing how strong the demand is and we should definitely expect to see these results continue to outperform the way that they have been. >> All right, so we started out with two of the really big giants in the memory sector. Now let's get to this last name that you have for us and this one has maybe the most interesting stock story. Anyway, >> yeah, that's SKH Highix. Uh, they are the wellestablished leader in in memory chips and and HBM memory. They in fact created HBM. They've got about 60% market share. Uh, the story right now is that the stock recently uh listed on the US exchange. Um, it's been publicly traded for quite some time in Korea. The US listing was a listing of new shares. They raised new capital that they're going to use to accelerate plans for expansion, capacity expansion and entry into the US. really just bolstering the story for memory demand long term because it's directly um translating into into into capacity expansions. Uh capacity expansions, you know, bode well for the market because it means that there's going to be increased supply long term and that they see the supply increase uh being needed long term. It's not going to cause um over supply which is a problem that's been plaguing semiconductor chips for the last few years. Part of the global semiconductor super cycle that's in play right now is um inmarket normalization and then improving in market demand that's linked to data centers but also broad-based across other in markets and industry um automotive and IoT. >> Yeah, clearly a lot of growth still expected from this company. I want to get into that more but first I want to talk about just some logistics. Some questions we often get from viewers is how do I actually invest in these companies logistically? And so I want to talk about this new IPO. That's an easy invest for any retail investor who has an brokerage account. They can go and buy the stock on the US exchange. But is there a benefit to buying the original stock on the Korean exchange versus buying this new US one? And logistically, can US retail investors still buy that other stock as well? >> I mean, uh, US investors can get access to the Korean market, but it's not super easy. I think that you're just as good investing in the US shares as the Korean shares, a share of of the of the company. I mean, they're an equal share. Um, it's [snorts] just going to be a matter of waiting for for your right entry point. Right now, with the post IPO action, it seems to be a little bit volatile. Certainly gives me pause looking at it. Uh, perhaps some of the other stocks may be, you know, better choices for right now, but I think the memory stocks in general are going to be good plays for the long term. Yeah, I want to talk about that IPO factor as well because we've learned many times over and I think all investors who are involved in the SpaceX IPO recently have learned that IPOs just have so much volatility that you know huge rise you might see in the first couple of days after an IPO launch can come down just as quickly. So for you, what's a good timeline to actually start looking at investing in an IPO that kind of hedges against some of that major volatility you might see in the first few days and weeks of trading? Well, IPOs are tough because they're all so different. It's hard to say for sure. You're going to have to watch each one. With this IPO, it's not a traditional IPO in which it's a brand new company. These are just follow on shares and additional listing of an existing company. I think that there'll be far less volatility in this one than there would be in a traditional IPO. I think that once you see some price stabilization, it would be a probably a good time to get in. >> All right, let's look at our are institutions a part of the the first investors in this IPO. Are we already seeing institutions jumping on board for this name in the US? >> Uh yeah, institutional investment was very high. What I understand is that the uh the IPO was heavily over subscribed indicating a high demand for the for the for the stock. >> One thing I think is interesting for this name is that I know it's a new IPO and it's this the American exchange version of the stock, but right now it's not getting a ton of analyst coverage for a company that is so big, that is the the sector leader. Why do you think it's getting so little analyst coverage? And also interesting to note the couple of analysts who are covering it have some pretty high price targets on this name. >> All right. So, Market Beat's only picking up two that I see, but I think coverage is actually probably broader than that. With it being such a new listing, I'd be pretty leerary about any US statistics you see. I'd wait a few months before I dig too much into those. I would want to look more closely at the Korean shares to see how many analysts are following that. And it looks like there's nearly 70 following the stock which shows me a pretty solid uh analyst and institutional backing. >> Yeah, so the data in the US exchange has to take some time to catch up yet. Thank you so much for sharing this list today, Thomas. I think it's good for investors to be looking at these names right now because the fundamentals are still very much there. The growth story is still very much there even though the price action might be down this week. So let us know in the comments. Are you adding more of these memory stocks to your portfolio right now? Or are you getting out and taking some profits yourself during this downtrend? I'd love to know what you're doing and what your strategy is. And if you want to hear more about a potential timeline for how much longer the growth story could last in the memory sector, make sure to watch this interview with Louis Navalier. He came on and specifically talked about some of these big memory companies and he gives a a really great explanation of why he thinks they still have a really good runway ahead for growth and when that growth story might start to end. Watch that full interview