2010 Picks: Micron and FormFactor (NYSE:MU),(NASDAQ:FORM)

Ah, year end when investors are picking their winners for next year.  Well, Bob Faulkner over at Minyanville kicks us a couple ideas for 2010 Investing.  The top of his list include Micron Technology, Inc. (NYSE:MU) and FormFactor, Inc. (NASDAQ:FORM).

Faulkner likes Micron Technology, Inc. (NYSE:MU) as the company reported its first-quarter/fiscal year 2010 last Tuesday and the results were huge. He addresses the Micron Bears that showed up after earnings by saying they had the usual script of “The stock’s had a nice run and we think it's at or close to peak margins (i.e. gross margin).”

Faulkner then astutely points out that none of these analysts can tell you what peak margins are for Micron because they're incapable of predicting future memory prices. He cites the example that oil analysts could not have predicted $150 per barrel a year in advance.

He then shows that Micron has had astronomically high margins in the past:
1992: 23%
1993: 38%
1994: 52%
1995: 55%
1996: 40%

His second pick for 2010 is a small-cap stock, FormFactor, Inc. (NASDAQ:FORM), which is a semiconductor wafer fab equipment company.  He indicates the bulk of FormFactor’s revenue is from DRAM manufacturers where it has more than 50% market share but it's now moving aggressively into NAND flash and other end-markets.

The memory industry has been trounced the last few years through the downturn.  However, Faulkner finds the stock interesting as the demand should increase, the company is developing new products for DDR3 and NAND, and higher efficiency of the new products (i.e. less cost to manufacture).

Get more details from Faulkner’s story here.