Why SMART Global Holdings, Inc. Stock Popped 43.5% in March

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What happened

SMART Global Holdings (NASDAQ: SGH) stock rose 43.5% in March, according to data provided by S&P Global Market Intelligence.

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The stock gains correlated with SMART's announcement that its executive chairman, Ajay Shah, would become the company's new CEO, replacing Iain MacKenzie after a transitional period. This was followed by a strong second-quarter earnings release and a fresh round of favorable ratings coverage.

So what

On the heels of announcing Shah as the company's new chief executive, the stock received a round of positive coverage from ratings firms. The company reported second-quarter earnings on March 22, delivering an 83% year-over-year revenue increase to reach $314 million in sales for the period and gross profit climbed 96% to hit $73 million. These top and bottom-line results both came in well above the average analyst estimates.

Jefferies and Roth Capital both gave the stock a "buy" rating on March 22. Stifel Nicolaus published a note on the company the next day, reaffirming its "buy" rating on the stock and issuing a $56 price target, and Barclays Capital issued an "overweight" rating the same day.

Now what

SMART sees favorable demand trends for its memory solutions -- particularly in the storage and networking segments. The company also sees favorable economic trends in Brazil, its home market -- which accounted for 66% of sales last quarter. Shares trade at roughly seven times forward earnings and 0.8 times forward sales.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.