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Welcome back to Everything Money. We are glad you joined us. In this video we will talk about Micron Technology. Ticker-MU. We'll show you the financials of Micron, a RAM company, their financials using our Everything Money software, and we'll translate those financials into a corresponding stock price you're willing to pay using our stock analysis tool.
If you want to trade Micron shares faster, you can join Mo. It will show you trends. It will show you graphs. It's all in this video, but why should you watch us? I ask your usual questions about Micron, how to invest in it, to a few wealthy guys who manag. Now we'll look at Micron, and I introduce you to Paul Gabriel.
Greetings. Guys, before we continue, please follow us on Instagram, our new YouTube channel, Instagram channel, and also follow our personal accounts. We would be very grateful if you would do so. Continue. The click of a gun? Yes, the click of a gun. This is a good thing. Here is our software. Come on, Paul.
This is our software. We will move on to the eight pillars tool. We will introduce Micron Technologies, MU. Okay, guys. Our analysis of the eight pillars. Oh, look at the stocks. They have fallen significantly. The 52- week high was 96. Good. So guys, first of all, Micron is an $ 85 billion company .
It's the price that's important to me. This is the market capitalization of the business. Our first pillar, we want the five-year forward earnings ratio ( P/E) for this company to be less than 22.5. That's almost half of it. Perfectly. 12.5. Check the box. Please tick the box. Pillar number two, we want a five-year return on invested capital of more than 9%.
What does this number mean for ordinary people? Well, first of all, it's 7.2, so it's X. Companies are made up of debt and equity as a way to finance a business . This is the return they receive on their total debt and equity in the company. There are many ways to calculate. I'm using cash flow for this, but it's here, at 7.2%, which is X.
Okay, guys, there's no dividend being paid here. But let's continue. So, our pillar number three, we'll move on to the profit and loss statement in our Everything Money software. Yes, this is the growth in income over the last 5 years. You want to see how they are doing. So, over the past 5 years, their revenue has grown from $20.3 billion to $27.7 billion.
I would say that's a tick. That's pretty good. Yes. Pillar number four is profit growth. So, we scroll down a little further, we move on to the net profit figure. We had a profit of 5 billion to 5.86 billion. Check mark. Pillar number five, guys, this is an important point. Many people ignore this. This is quiet investing in stocks.
These are outstanding shares. And the reason why this is important is that people don't realize when companies do this, issuing more shares, but they dilute your equity as an owner. They distribute the profits among a larger number of shares, even if...So you keep the number of shares the same. Let's say you own 100 shares.
When they add more shares, now you essentially have more partners that you have to split the same amount of money between, okay? So, we see that the number of shares outstanding either remains the same or decreases. So we go to the very bottom of the income statement. 5 years ago, 1.11 billion, last year 1.12 billion.
It's an X. Barely an X, but still an X. So, so far we have two Xs and three ticks. And , guys, if this math is confusing to you, I'll show you in a few seconds a part of our website that does all the checks and X's for you in advance. The field, P/E is good and low. Why do we never mention the words " go ahead, P/E" on our show?
This is a huge advantage over all other channels. Of course, this is a way to justify paying for the company. You say, " Oh, but next year they'll make a lot of money." It's like: well, okay, I'm just looking at it from a development perspective, plus analysts tend to be much more optimistic in the long term than they should be.
So I just ignore it. I sit down and say, "Listen, let me make my predictions, but I'm going to look to the past and see what it shows me." Pillar number six, guys. This is a debt. We added the debt metric to our performance , to our analysis, because obviously, like you guys, a company with less debt will stay afloat longer in tough times.
This is what you want. So, I'm going to the main page of our software. I'm moving on to the five-year average free cash flow. I multiply that by five. That would be about 17.6 billion, maybe 17.7 billion. I want my total long-term liabilities on my balance sheet to be less than 17.6. So, it's very simple.
I scroll up, go to balance. I scroll down. Long-term liabilities 8.49, less than half of the amount we need. That's good. They have less debt, meaning they can pay off their debt, based on the average free cash flow over the past five years, in two and a half years or less. That's pretty solid. If you...Sorry, Paul.
If you've only invested by buying stocks and hoping they'll go up, this can be refreshing. If this resonates, stay tuned . We will move on to Mo Trading. We'll show you how much to pay for it in the future, Paul. Free cash flow is incredibly important. This is the seventh pillar. So, I look at free cash flow the most because it's harder to manipulate.
Profits can be manipulated based on SEC rules, accounting rules, etc. Free cash flow is cash from operating activities minus your capital expenditures. You can use this money for one of five things: buying back shares, paying dividends, making acquisitions, paying down debt, and reinvesting in your business.
Well, just like you have free cash flow at home, you can do the same with it. You can put it towards savings, you can pay off debt, reinvest in yourself, reinvest in your real estate, your house, etc. The same goes for the company. That's a nice way to say it, Paul. I like it. So, I'm moving on to the cash flow statement in our software.
Guys, I added this line because I am the nicest person I have ever met in my life. Even my mother agrees. He will agree. Okay . Cash from operating activities minus your capital expenditures, I added this line right here to do the math for you. Five years ago it was 3.42 billion. Last year it was 2.44.
And, guys, I don't like this inconsistent free cash flow. You have the last 10 years. So I automatically see that and say, let me be cautious when looking at free cash flow in one year. My, did you find out why they had such a big surge? There was some kind of credit agreement, but I can't find exactly what it is .
Because they also had a huge increase in free cash flow that year. Yes. So guys, our final metric is the five-year average free cash flow . We multiply it by 20 to get the price for the company. Does this mean this is the final price? No. This is not the final price. This is the starting point. Faster growing companies get a bigger bonus, slower growing companies get a smaller one, but that's the starting point for our pillars.
We take 3.57*20, which is $71.4 billion. So, we want the market cap to be less than 71.4. What is the market capitalization? Oh, yes, 85.85 billion. So, it's X. That means the company is selling for more. And, guys, I don't think this is a company that deserves a high free cash flow price. It doesn't grow very much.
I don't like what I see. So, look at the tab with the eight pillars. Like I told you guys, make your life easier. Here are all the crosses. Hmm. So, I think this 5-year P/E ratio is distorted because it doesn't match the 5- year free cash flow price. Um, don't fall in love with this P /E. Now guys, this software was created because our users want to do more analysis.
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After we're done... Let's move on to the stock analyst now, Paul, but I want to tickle your imagination. Let's move on to the stock analyst now. Yes, because I want to tickle your imagination. Open this maximum schedule because you're going to love what you see with one of these guys. M U Yes. Oh, this...This is a big company back in the 2000s, I think.
Mhm. That's it. Oh, look at this. Show the audience. Oh, guys. So, kids, all these YouTube guys promoting stocks would say, “Yeah, look. In 1995-1996 they fell and then collapsed, but look at the back end." And here they would say: "These stocks are going to the moon." Guys, 20 years later they haven't reached their previous peak.
Let me show you something different. 20 years ago, in 2000, their revenue was 6.6 billion. Now it's 28. That's more than four times higher revenue, and the stock still hasn't surpassed its previous high. So when people say that a growing company means the stock will go up, they have no idea what they're talking about.
Mmm. If you pay a reasonable price for a growing company, it will succeed. If not, we'll add Micron to our list. The same thing happened with Intel and Cisco. These things happen. So be careful when you look at these things. Wow, that's incredible, Seth. Thank you for noticing this. Yes, this is the tricky part, folks, we want to imagine that we are buying the entire company, so we look at the market cap.
But how do we translate this into a share price? Paul will show us using our stock analysis tool. So guys, one thing I'm going to look at here, I'm going to move on to the cash flow statement . I'll see if they make many acquisitions. It seems not. That's good. So we'll have something natural that was there in the past, but not very much recently.
So we have a lot of natural...Excuse me. We have a lot of natural growth . Was it chemotherapy? Yes. I tried to hold back my sneeze, but it didn't work. The first thing I'll do is do a 10-year analysis, because I think Micron will be around for a long time. Of course. I will choose the number of assumptions as three.
You can choose one, two or three. Income growth. Guys, our job is to be conservative, and hopefully we'll find a company that's selling for less than our conservative numbers. This is what a value investor does. There are 10,000 shares. Your task is to find 20 or 20-40 that meet your criteria for being conservative and buying at a discount to what we consider to be intrinsic value .
So, growth. I'm going to choose four, seven, and 10% revenue growth. I think so, but I'm going to do it anyway. Profitability looks quite stable. 20, 22 and 24. Free cash flow profitability is much lower. 9, 11 and 13. RVP, guys, is a slower growing company, so I want to be conservative with my RVP.
I'm going to pick 12, 14, and 16. The same goes for free cash flow. I'm going to make 12 with a 1/2% return. Why strive for a return of 12 1/2%? Guys, if you buy ETFs over a long period of time, you will earn closer to 10% of the historical average . So, to buy an individual stock, make it worth your while.
Don't do it just for the sake of 10%. Click the analyze button. And, guys, every investment is the present value of all future cash flows. This will tell you, based on these assumptions, how much you should pay to get a 12 1/2% return. Good. Actually, things don't look so bad here. You have several prices that are realistic.
This average range is between $40 and $86. Big range, right? However, this is because free cash flow is currently severely skewed. Hmm. So, he falls hard. So maybe this stock, if you believe the P/E ratio, is actually not bad. It may be a little understated. I mean, it's not that bad. If you base it solely on free cash flow, that will be a problem.
She is too expensive. But if you base it on profits, I don't know. Maybe that makes sense. This is all off the charts, so I urge you to be conservative in your assumptions. But again, if you don't agree with my assumptions, go with the software, change your assumptions, do some research, figure out where they're going.
Because you know what, guys? If I change that to 8, 11, and 14%, which anyone can do, suddenly the stock will look very cheap. But again , my goal is to buy at a discount to my conservative figures. It all depends on what you want to do with it . I can be very conservative. This happens very regularly.
My goal is that because I have so many businesses and investments, I want to be very conservative and just take into account the natural organic growth of my companies and find companies that are being ignored. This may not be one of them. But it could still be a good company that, if it grows 8-10 % per year for the next 10 years, could be a very good investment at the current share price.
This is an approach to value investing. If you want to trade this at a faster pace, you can trade this throughout the day, you can swing the momentum. You can join Moe at Bid Ask Nation. He will help you, show you graphs. What's going on with Micron there? Look at that growth, Mo. I would... Yeah, I mean, what I'm...
That's what Seth's talking about right here, and I love it. Your stochastic is starting to move towards this golden point, and it has plenty of room to move. Now you're faced with...I'm just going to try to draw a straight line here, and I did... You just need to get some volume and break through this resistance point that I just drew.
But from there , I mean, I can definitely see this thing going back to $96. Let's move on to the daily chart to see what resistance we are facing. And we're facing, as you can see , we're stuck at this 100-day moving average right now. And this little spindle-shaped candle that we have today practically indicates that the stock price will drop back to the 100- day mark.
So , to confidently pass the 100-day mark and pass the 200-day mark around $80, you will need volume. But I don't think that's exceptionally possible. This is something I would definitely add to the watchlist or add to the stock tracking list for the long term. Profits won't be until Christmas, Missouri.
So, I mean, do you expect any volume to flow into these stocks? Do you know what exactly Micron sells? Chips. Chips? So, with everything that's happened, I mean, are these chip companies struggling just because of Doritos Locos? What? Doritos Locos chips. This...They sell potato chips? RAM. This is RAM .
This is RAM . Right. This is RAM. Sorry. You are right. By the way, I knew these weren't potato chips, for those of you who are going to criticize. But, uh, you know, the chip shortage is a real thing that's happening right now. RAM now. Well, still in memory, I mean, it's all connected . Listen, all this technological stuff is mostly sorely lacking.
Together. So, with that, uh, I don't know. We could... we'll just see what people say about it . News will move stocks. News will always move stocks. So the news will just keep doing it. Field, a final look at Micron. I...There are a lot...I would ...This is one of those companies where if you know a lot about the chip industry or you're confident in it, consider it.
They have long been a great name. Uh, sorry, not the chip industry, but the RAM industry. I just... There are... Numbers everywhere. I...This makes me uncomfortable. For me, it's discomfort, discomfort. However, if everyone else is doing the same thing and the price can fluctuate because of this, you may find an opportunity when everyone else is ignoring it.
But, as far as I'm concerned , you know what other players in the RAM industry are doing, what's happening to them, etc. I just have to do more research on this. But for me, it's not a blatant deal, but it's not overpriced either . It just seems like maybe it's worth the price now. Hmm. Yes, you can find 10 thousand in our software.
You can read more about this. We're probably missing something. This is an initial screening. And so if it gets past some of your initial levels, then go ahead and that's our opinion. So, okay, this is Micron. See you in the next video. Join the community below. You can talk to other people about this same campaign, and we'll see you in the next video. Thumbs up on the way out. See you next time.
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