Seagate: Cash Machine?

04/24/2017 2:50 am EST


Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

It seems Wall Street is ever more upbeat on the pricing of digital storage (hard disk drive) products, with Seagate Technology (STX) upgraded from Neutral to Buy/Overweight by Longbow, states Bryan Perry, editor of Cash Machine.

STX is a great tech company; the company pays a $2.52 annual dividend that sports a current yield of 5.38% and makes for a nice fit to our Safe Haven model portfolio.

The company is forecast to earn $4.50 per share this year and has beaten earnings estimates for the past three quarters. The company’s next earnings release date is scheduled for around May 5th.

Zacks Research wrote on April 7th that Seagate Technology might be in a strong position to exceed earnings estimates again. It maintains a #2 ranking (Buy) on the STX shares as analysts’ estimates recently have been rising. Such upgraded forecasts almost always are a bullish sign for future share-price increases.

Seagate is a rarity in the tech sector, since the company has been in a rapid transition phase of new product deployment while generating enough cash flow.

Despite increased adoption for solid-state and flash drives, hard disk drives have retained a high level of demand as they continue to be the primary choice for mass storage, particularly among enterprising customers seeking high performance and cost effectiveness.

High-capacity hard disk drives continue to see strong demand, fueling Seagate’s turnaround. The company’s 2016 revenues from this segment were up 19% year over year.

We should see a continuation of sales momentum in the first quarter as China’s economy and the company’s biggest importer are showing better growth. I think that shares of STX can trade up to $58, or 20% higher than where the currently trade. Buy STX under $49.

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