4-Star Stocks Poised to Pop: Western Digital

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, disk drive specialist Western Digital (NYSE: WDC  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Western Digital's business and see what CAPS investors are saying about the stock right now.

Western Digital facts

Headquarters (Founded) Irvine, Calif. (1970)
Market Cap $8 billion
Industry Computer storage and peripherals
Trailing-12-Month Revenue $9.89 billion

CEO John Coyne (since January 2007)

CFO Wolfgang Nickl (since 2010)

Return on Equity (Average, Past 3 Years) 26.7%
Cash/Debt $3.11 billion / $350 million

Hitachi (NYSE: HIT  )

Seagate Technology (Nasdaq: STX  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 95% of the 1,403 members who have rated Western Digital believe the stock will outperform the S&P 500 going forward. These bulls include tomlongrpv and All-Star fcfroic, who is ranked in the top 10% of our community.

Late last year , tomlongrpv tapped Western Digital as a rather cheap way to go for growth: "A good competitor to Seagate in a market that seems likely to grow. Earnings growth is outpacing growth in its price to earnings ratio and the latter remains below average right now."

Currently, Western Digital even trades at an EV/EBITDA (2.9) discount to main hard drive rivals Hitachi (4.5) and Seagate (3.1), as well as solid-state drive threats Intel (Nasdaq: INTC  ) (4.9), SMART Modular (Nasdaq: SMOD  ) (3.5), and STEC (Nasdaq: STEC  ) (16.7).

CAPS All-Star fcfroic elaborates on the bull case:

The hard drive industry has consolidated massively and appears to have gained a modicum of pricing power. Perhaps the hard drive is going the way of the dodo. If that's the case, this is a Buffett "one puff cigar" and we are best to avoid the stock. However, it does appear that [Western Digital] continues to generate substantial free cash flow, while continuing to reinvest in its business. As a point of differentiation, [Western Digital] appears to lead the industry's fastest growing segment, 2.5 inch drives, and has industry leading aerial density products at the 640 gigabyte, 750 gigabyte, and 1 terabyte capacity points.

What do you think about Western Digital, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Intel is a Motley Fool Inside Value pick, and Motley Fool Options has recommended buying calls on it. The Fool has bought calls on Intel. The Fool owns shares of Western Digital and Intel. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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