Samsung Is the New Memory Chip Underdog—for Now

A sell-off in the triumvirate of memory chip stocks this month—Samsung, SK Hynix and Micron Technology—has presented investors with a fresh opportunity to get exposure to the fast-growing sector. But investors buying in now have to be willing to dismiss the worries that sparked the sell-off—that the memory chip surge will falter in the next few years, as it has done many times in past boom-and-bust cycles.

One solution for investors is to opt for the cheapest stock. Samsung is the cheapest of the three companies on different valuation metrics. It trades at just under 4 times book value, the metric investors and analysts have historically used to assess these companies’ performance, less than half where SK Hynix and Micron both trade.