At The Motley Fool, we poke plenty of fun at Wall Street analysts, and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." Here, we'll show you whether those bigwigs know what they're talking about. With help from Motley Fool CAPS, we track the long-term performance of Wall Street's best and worst.
And speaking of the best ...
Shares of hard drive maker Western Digital
In all cases, the upgrades rested on a reborn dividend from Western Digital's largest rival, Seagate Technology
The nudge from Caris is particularly interesting, because that firm has a pretty firm grasp on the computing sector, including these winning picks:
Company |
Caris Rating |
CAPS Rating (out of 5) |
Caris' Rating Beating S&P By |
---|---|---|---|
Apple |
Outperform | *** | 280% |
EMC |
Outperform | ***** | 128% |
Hutchison Technology |
Underperform | *** | 80% |
In this space, Caris carries a nigh-on unbeatable accuracy rating of 90%, with at least four big winners and only one losing pick. The firm jumped on the EMC and Apple bandwagons way back in 2006, when neither stock was an obvious market darling, and it's an overall all-star stock picker across all sectors.
In other words, when Caris makes a call on technology stocks, it doesn't hurt to prick up your ears a bit.
Foolish final thought
The storage market is packed to the gills with perennially undervalued performers. Much of the skepticism seems to come from investors keeping a hungry eye on memory-based storage technologies. That makes solid-state storage specialists OCZ Technology Group
But I agree with Barclays, Caris, and the other hard drive bulls that there should be good times ahead for the traditional storage industry. Solid-state may eventually kill magnetic disk drives, but the cost difference is still large enough to keep hard drive demand strong for years to come. As memory chips get cheaper, Western Digital and its cohorts will also continue to drive down their cost structures, and thus preserve their remaining advantage. The fallout from the quake should provide another short-term boost to the entire industry.
Seagate and Western Digital are deeply entrenched leaders in this sector, and both are very well-positioned for the short-to-mid-term future. That's my take, and these days, a horde of Street analysts agrees.