Shares of Seagate Technology (STX) gained 31.9% in January, according to data from S&P Global Market Intelligence. Strong business results did the heavy lifting for this hard-drive maker, but Seagate also got a boost from a large cryptocurrency investment.
Seagate shares rose 7% on Jan. 8 alone, driven by unofficial reports that the company was an early investor in Ripple. That company backs the eponymous Ripple cryptocurrency, or XRP, which has grown into one of the largest crypto-coins on the market today. The value of the tokens has skyrocketed 113 times higher over the last 12 months, so if Seagate's early investment included any ownership of XRP coins, that would have potentially added billions of dollars to Seagate's enterprise value. Its investment in Ripple also positions Seagate as an early adopter and supporter of blockchain technologies, though it's unclear exactly how that foresight might help a maker of data-storage hardware.
The company pre-announced its second-quarter results that day, adding fuel to the fire with surprisingly strong top-line sales and wider profit margins. Three weeks later, the final report added color commentary and fuller financial details, but the basic story was still the same: Seagate is selling a lot of enterprise-grade hard drives these days.
I happen to prefer Seagate's archrival, Western Digital (WDC 0.38%), for the simple reason that it seems better positioned for long-term success in a world that's moving deeper into solid-state storage devices. But Seagate has found a comfortable niche where its focus on reliable and affordable bulk storage might keep it relevant for a few more years. And the company is attempting to address the SSD issue by partnering up with major memory-chip supplier Toshiba (TOSBF).
Between surprisingly solid hard-drive sales and that forward-thinking Ripple investment, Seagate sure seems to be on a roll right now. I'm not convinced that the market momentum will carry this stock much higher, but many investors were optimistic in January.