Seagate and Hard Drive Sector

By | January 27, 2006

Check out Seagate’s (STX) 3-month graph. It’s so nice and beautiful, similar to Apple’s last year. STX up 57 cents today, and went up another 40 cents after-markets.

Look at Maxtor’s (MXO) 3-month graph. Two months ago it was sub-$4. Today, it’s up 250%.

But the biggest surprise is Western Digital (WDC). They’re up 85 cents today and another $1.86 after-markets. They beat earnings by 9 cents — meaning they did 24% better than the expected 38 cents.

Two months ago I said the hard drive industry is going to make a major come-back soon and Seagate is a good bet. Looking at the graph, $30 looks like the next stop. I’m going to accept $20 is gone and have to buy at these prices before these prices go away too.

Here are some notes based on my research.
Seagate (STX)
Forward P/E 12 (very low compared to tech sector)
Expected Growth: 12.5% per year for the next 5 years
12.5% Profit Margin
8.54B in Revenue
1.75B cash on hand
$3.6 cash per share
Low debt
Pays Dividend (Not many tech companies pay dividends)
Top Brand Recognition
Vertical Storage Technology – allows HD size over 100 gigabits per square inch, eventually 1-TeraByte HD on a single 3-inch disc
Super high demand in the storage sector now as shown in STX, MXO and WDC in this past month.

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