How the U.S.-China Truce Cements a 119% Gain for Our Top Semiconductor Stock

Semiconductor stocks just got their biggest catalyst of the year.

U.S. President Donald Trump and Chinese President Xi Jinping were said to have reached a truce agreement in their trade talks at the G-20 meeting in Osaka, Japan, on Saturday, June 29.

We've kept recommending this industry - predicted to be worth $831.5 billion by 2024 according to Statista - despite the trade war because we knew it would end. Now, our top semiconductor stock is about to surge 119% higher.

Several chip stocks including Qorvo Inc. (NASDAQ: QRVO) and Skyworks Solutions Inc. (NASDAQ: SWKS) gained more than 6% when the markets opened the following week. Qorvo is still expected to gain 30% over the year, and Skyworks is expecting growth of 114%.

But neither of them are as primed for a breakout as our best semiconductor stock, which delivers the highest earnings of the three. Some analysts give it a high growth target of 119%.

And that's not a long shot. This stock has a perfect Money Morning Stock VQScore™ of 4.75, meaning its price is sure to pop any second.

But if numbers aren't enough, recent events have also served this stock well.

Yes, the truce is good for the world economy.

But there's one specific part of it we're even more excited about...

What a Truce Means for Semiconductor Stocks

We've been saying the trade war is a passing trend. All noise.

And while we're happy to see cooler heads starting to prevail, the biggest breakthrough is the United States lifting some tariffs and bans on the Chinese telecom giant Huawei.

You see, semiconductor stocks are poised to hugely benefit from the rollout of 5G networks. They are literally the basis for all the computer chips needed for 5G to operate.

5G networks are what will fuel growth in the Internet of Things market - including wearables, digital assistants, self-driving cars, and medical equipment - to their projected heights of $561.04 billion by 2022. That's 229% industry growth in under three years.

Without a new threshold for wireless speed, those technologies simply won't work. That's what makes 5G the biggest evolution in wireless communication so far.

The Biggest Tech Rollout in History is set to create an expected $1.4 trillion boom for the economy. Not only will you be able to kiss your cable box goodbye forever - you can also make a fortune. Learn more...

And while Huawei is one of the world's largest 5G technology companies, its equipment is very difficult to purchase in the United States.

U.S. officials have repeatedly expressed fears that Huawei technology could be a back door for Chinese espionage. President Trump released an executive order prohibiting U.S. government agencies, and even large U.S. tech companies like Alphabet Inc. (NASDAQ: GOOGL), from conducting business exchanges with Huawei.

Huawei has argued that if bans are not lifted, the transition to 5G will be slowed - Huawei and U.S. tech firms rely on each other's components for their products, and 5G is no different.

But if President Trump follows through on his promises to lift those bans, it could only mean a boost for the American semiconductor industry sooner than we thought.

And that's especially true for the best semiconductor stock to buy right now.

Its money-doubling potential is just the beginning...

Our Best Semiconductor Stock for the 5G Revolution

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

Micron Technology Inc. (NASDAQ: MU), based in Boise, Idaho, produces computer memory and data storage drives.

Founded in 1978, Micron has worked on several projects with Intel Corp. (NASDAQ: INTC) over the last few decades, joint ventures to improve the quality and capacity of memory storage. They are responsible for the first microSD card with 1 terabyte storage capacity.

In 2018, Micron placed 150th in revenue on the Fortune 500.

Micron started 2019 with Q1 revenue at $7.91 billion, up 16% from last year.

It also increased operating cash flow from $4.81 billion to $3.64 billion year over year for Q1.

Since 2016, this company has more than doubled annual profits. But that doesn't even touch the growth this stock will see once the 5G revolution catches on.

Today, MU stock sells for $40.41, with a with a high price target of $90 in the next 12 months. That means some analysts expect it to grow 119%.

That's just the start.

The stock has a price/earnings ratio of 4.75, which is outrageously low compared to the semiconductor industry average of 71. There's no doubt the trade war is keeping a lid on the stock. And that isn't going to last.

If trade relations between the United States and China continue on a positive trajectory, there's room for MU to soar even beyond the most bullish analyst projections.

What's more, MU has a near-perfect VQScore of 4.75, which is even more reason to expect the stock to outperform analyst projections.

WATCH: Silicon Valley Insider Makes Controversial Prediction That Could Make You $565,640

Michael Robinson has been a Silicon Valley insider for 35 years. He's been involved in some of the biggest tech breakthroughs of the last two decades, including the PC, the iPhone, and MEMS sensors. So he knows a little about the "next big thing." However, his latest prediction is turning a lot of heads. Is he right? You decide. Go here.

Follow Money Morning onFacebook and Twitter.

About the Author

Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.

Read full bio