Great Call on Citigroup! What's Next?

Most investors taking a hard look at Citigroup (NYSE:C) today would likely come to the conclusion that Citi can be best described by a rhyming four-letter word -- pity. It's a pity for investors, it's a pity for the financial system, and it's a pity for the taxpayers who are propping it up. OK, some may use even stronger words for Citi, but I'll leave those for other venues.

With that said, it may be surprising to hear that there's been a "great call" on Citi, not to mention that the call was that the stock would outperform. But that's what I'm going to tell you. Though Citigroup is rated a poor two stars on Motley Fool CAPS, rexlove has managed to make two very timely outperform calls on it to add a combined 145 points to his score.

rexlove is one of CAPS' All-Stars -- members with a rating of 80 or greater -- and has managed a stock-picking accuracy of 52% while racking up more than 850 points. Citigroup isn't this member's only great call. Here's a look at a few of the other prescient picks:

Data from CAPS.

So what is this investor looking at these days? Here are a few recent calls on CAPS:

Data from CAPS.

While not all of these picks may pan out, they could be a good place to start some further research. I decided to take a closer look at Seagate.

At the Seagates
rexlove's reasoning behind the Seagate pick was to take advantage of the stock's killer yield -- which in early January was more than  8.5%. Times have changed, though. Facing the realities of a highly unpredictable economy -- not to mention the tighter reins of a new CEO -- the company cut its dividend to $0.03 from $0.12 per share per quarter. Taking the subsequent fall in stock price into account, Seagate now yields a respectable, but not quite as killer, 3.2%.

The trouble is that not only is Seagate facing an economic full-court press right now, it's also dealing with a technological transition in computer memory. If you break open your computer and check out the hard drive or decide to pick up an external hard drive to back up your system, you'll probably see Seagate's swirly logo staring back at you. But as fellow Fool Tim Beyers recently pointed out, solid-state memory from the likes of SanDisk (NASDAQ:SNDK), though still an up-and-coming technology, is getting all up in magnetic memory's face.

What does this mean for Seagate? If you ask CAPS member bigpoppapav, not a whole lot for the foreseeable future. Last month, he gave Seagate a thumbs-up and said: "The notion that hard drives are being replaced by flash drives is ridiculous. Flash drives will win in nanocomputing but hard drives will win for mass storage. Even tape drives still exist." Which is hard to argue with, although I'm not sure how juiced I would be to invest in a company focusing on tape drives right now.

When I sandwich these two issues -- technology transition and a tough economy -- with Seagate's $2.4 billion debt load, I'm less than excited about the stock. In the world of hard drives, I may give Western Digital (NYSE:WDC) the nod over Seagate, because, although it isn't as generous with its shareholders (it doesn't offer a dividend), it seems to be weathering the downturn a little better and it sports a much cleaner balance sheet. Of course, if what you're after is the rare marriage of dividends and tech, both Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) yield 3% or better.

But here's the important question: What's your take on Seagate? Will it be able to overcome its challenges, or will new technology and slow spending continue to hobble it? Get in on the action by clicking over to CAPS. CAPS is absolutely free and already has more than 125,000 members chipping in to find the best stocks out there.

More CAPS Foolishness:

• America's Next Top Growth Stock
• America's Next Top Value Stock
• 5 Dynamic Dividend Stocks