My value algorithm flagged Micron as the #1 value pick in the S&P 500 on April 1st. I thought it was a bug.
u/stockoscope ·
Reddit — r/ValueInvesting
· May 06, 2026 at 10:40
· ⬆ 17 pts
· 💬 39 comments
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Summary
The author describes how their quantitative value algorithm identified Micron (MU) as the top value pick in the S&P 500 on April 1, 2026, despite the stock having risen ~7x from its cycle low.
The thesis is that strong earnings growth (EPS from -$5.34 to $21.44) and high-quality fundamentals (ROE >40%, DCF margin of safety 82%) made MU undervalued at 16x trailing earnings, not the price level itself.
The post is a retrospective case study (90% gain in 35 days) and does not advocate a current position. It is well-researched DD with clear metrics, but the author explicitly states "not investment advice."
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A month ago, on April 1st, my value algorithm flagged Micron as the top value pick in the S&P 500 and I was like, "are you kidding me?" How can a stock that had run from roughly $50 in 2023 to $338 in April 2026 could be a value stock? I genuinely thought it was a bug.
But then i checked the numbers. They held up
My algorithm scores stocks out of 100 across four dimensions. I've posted about the framework in this community [prevously](https://www.reddit.com/r/ValueInvesting/comments/1ngp8l7/built_a_grahaminspired_value_framework_that/), but here's how MU scored on April 1st at $337.84:
\- Traditional valuation: 16/30. P/E 15.76, P/B 5.25, EV/EBITDA 10.21. Multiples were reasonable but not bargain-bin cheap, which is why this leg lost the most points.
\- DCF margin of safety: 20/20. Fair value $586.77 against price $337.84, 82% margin of safety. Maximum points.
\- Business quality: 35/35. ROE 40.84%, ROIC 27.69%, current ratio 2.90, D/E 0.15, interest coverage 80x, net margin 41.49%. Perfect score across every quality metric the system measures.
\- Growth sustainability: 10/15. Revenue growth 13%, FCF yield 5.8%.
Total: 81/100. Rank 1 in the S&P 500 for April 2026.
What made this counterintuitive was the chart. But underneath it, EPS had gone from -$5.34 in FY2023 to $21.44 on a trailing basis. Earnings were running faster than price. At 16x TTM EPS, Micron was cheaper than it had looked in years, even with the stock up seven-fold from its cycle bottom.
In the 35 days since, MU has moved from $337.84 to $640.20, around +90%.
The lesson: price doesn't determine whether something is a value stock. Earnings do.
Curious how others approach value in cyclical stocks. Not investment advice. DYOR.