Semiconductor stocks are posed to heat up as we head into the latter part of 2010. The industry as whole posses very attractive valuations; one stock, however, particularly stands out.

Micro Technology (MU)

Micron Technology manufactures and sells different semiconductor products – most notably DRAM and NAND memory. You may have never heard of these products, yet you likely use them every day. These semiconductors can be found in PS3s, iPhones, MacBook Pro’s, you name it. They also come in the little flash memory cards and USB holders people now carry around on key chains and in Swiss Army Knives. Your daily life operates around this technology.

These products’  continual growth will be a key driver to MU’s future success. Like most companies, MU struggled in 2009 due to many failures in the economy. However, it has restructured its business successfully and stormed back with amazing results. In 2010, Q2 sales soared roughly 100% from the year before to around $2 billion. Individual memory products sales grew 106%. The two main forms of memory, DRAM & NAND, grew 173% and 32% making them key drivers to the future growth. In as little as a year, MU turned a loss of $763 million into a gain of $365 million. These numbers are a shocking turnaround that I believe has just begun.

Growth prospects for MU only continue to improve. The digital memory industry is rapidly growing as we are constantly requiring higher amounts of memory space. MU has successfully acquired key competitors to increase market share and expand its product portfolio.

All this aside, the reason I love MU so much is it’s such a cheap stock. Currently MU is trading at only 7 times expected earnings. To put this in comparison, Sandisk (close rival) trades at 14 times while having not as strong earnings and growth projections. Adding to this, the company has steady cash flow and has made several key acquisitions and investments to continue to be competitive. Producing a 35% return of equity in the past year, MU seemingly does everything right. I feel MU is a strong investment and trading around mid-$7 range is dirt cheap, so make the plunge. I project MU to be trading around $13 come a year from now.

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