Why SK Hynix Stock Popped Today
Key Points
The Trump Administration does not want Apple to buy memory chips from China.
It would prefer Apple buy from Micron and Sandisk.
Buying some memory from Korea's SK Hynix might be a fair compromise.
Korean memory chip manufacturer SK Hynix (NASDAQ: SKHY) stock jumped 4% through 10 a.m. ET Monday -- and it has Donald Trump to thank for it.
Over the weekend, Trump Commerce Secretary Howard Lutnick told The Wall Street Journal that the Trump administration "is not in favor" of plans floated by Apple (NASDAQ: AAPL) to solve its supply problems by buying memory chips from Yangtze Memory Technologies and CXMT in China.
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What this means for SK Hynix
The Trump Administration doesn't necessarily favor Apple buying memory chips from Korea. White House spokesman Kush Desai is quoted as assuring investors that "reshoring semiconductor manufacturing [to America] is a top priority" -- which sounds like good news for DRAM specialist Micron (NASDAQ: MU) and flash memory expert Sandisk (NASDAQ: SNDK).
Still, given his druthers, I suspect the President would prefer Apple (and others) buy their memory chips from a friendly country such as South Korea rather than from China, which has a habit of underpricing rivals to drive them out of business -- then turning around and cutting off supply for geopolitical purposes.
Long story short, the President's policy could well benefit not just Micron and Sandisk, but their rival SK Hynix as well.
What's next for SK Hynix stock
So does this mean it's time for you to buy SK Hynix stock? Perhaps.
Priced today at 8.1 times trailing earnings, SK Hynix costs less than either Sandisk (at 21.4x) or Micron (at 21.7x earnings). Analysts polled by S&P Global Market Intelligence will tell you all three stocks are "buys," given Sandisk is expected to grow its earnings at nearly 40% annually over the next five years, and Micron might average closer to 173% per year. SK's right in the middle at a projected 86% growth rate.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Micron Technology. The Motley Fool has a disclosure policy.