Why Western Digital Will Keep Flying in 2014

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Western Digital (NASDAQ: WDC  ) gained about 1% this morning after Bank of America upgraded the hard drive technologist from neutral to buy.

So what: Along with the upgrade, analyst Scott Craig boosted his price target to $102 (from $87), representing about 15% worth of upside to yesterday's close. While contrarians might be turned off by Western Digital's hot stock price over the past year, Craig believes there's more room to run given his view of continued improvement of the company's fundamentals.

Now what: According to Bank of America, strengthening information technology demand should drive revenue, margin, and earnings-per-share upside for Western Digital. "While PC demand remains challenged, declines are moderating and December quarter industry TAM should surprise at low 140mn's versus prior guidance of 139mn," Craig noted. "Commentary from hardware OEMs/distributors such as HP, Synnex etc. has pointed to a modestly improved IT demand environment." With the stock now up 100% over its 52-week lows and trading at a 20-plus P/E, however, holding out for a wider margin of safety seems like the prudent move to this Fool.

More reliable ways to build wealth
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2797853, ~/Articles/ArticleHandler.aspx, 10/25/2014 4:38:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement