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Why Seagate (STX) Stock is a Must Have in Your Portfolio

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Seagate Technologies Inc.STX is firing on all cylinders. The company is benefiting from strong demand for storage devices and improving exabyte growth in end markets.

Additionally, advancement of cloud storage technologies in the industry is a tailwind. This has led to an increase in the deployment of high capacity mass storage products, which bodes well for Seagate.

Moreover, the company's long-term agreement with Toshiba for NAND chips supply will help it to expand product portfolio, rapidly. Further, Seagate's effort to improve areal density with the ramp up of heat assisted magnetic recording ("HAMR") technology is expected to be shipped in 2019. This is likely to drive revenues in 2019.

These factors are expected to keep Seagate's earnings per share (EPS) on a growth trajectory, which is currently projected at 18.1%. Notably, the company topped the Zacks Consensus Estimate for earnings in three of the trailing four quarters.

Currently, Seagate has a Zacks Rank #2 (Buy). Notably, the stock has returned 23.1% year to date, substantially better than the industry's rally of 10.0%.

Strong Demand for HDD

HDD requirement is growing due to strong demand for high-capacity mass-storage solutions. Per management, in the second quarter of fiscal 2018, 10-terabyte helium nearline product was one of the major top-line driver. 12-terabyte helium product is also gaining favor among users. High customer satisfaction is likely to boost the market adoption of these products.

Further, stabilization of the PC market per the latest report from Gartner and IDC bodes well for memory shipments, particularly HDDs. According to IDC, worldwide PC shipment has shown signs of growth in the fourth quarter of 2017, during which shipments grew 0.7% on a year-over-year basis to 70.6 million units.

Seagate also expects its exabyte shipments to be around 88 exabytes, which reflects drive shipments to be around 40 million and average capacity per drive to be approximately 2.2 terabytes. The company has experienced exabyte growth in all end markets that include PC compute, consumer, surveillance, gaming, and NAS markets.

Other Stocks to Consider

Investors can also consider Super Micro Computer SMCI , Adobe ADBE and AMETEK AME from the broader technology sector. While Super Micro Computer sports a Zacks Rank #1 (Strong Buy), Adobe and AMETEK carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Long-term earnings growth for Super Micro Computer, Adobe and AMETEK are currently pegged at 14%, 16% and 11.50%, respectively.

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Seagate Technology PLC (STX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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