Western Digital has the drive for success

Posted Apr 8th 2008 5:58PM by Joseph Lazzaro
Filed under: Stocks to Buy

The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is Western Digital Corp.

Western Digital Corp. (NYSE: WDC) is one of largest, independent hard drive manufacturers in the world.

In general, analysts see 35%-45% revenue growth in FY 2008, reflecting the Komag acquisition, and solid PC hard drive and DVD hard drive demand.

Analysts are also impressed by Western's strong execution, enhanced manufacturing efficiencies, and ability to increase market share. Many analysts see margins increase to about 20% from the high teens in F2008.
The Reuters FY 2008/FY 2009 EPS consensus estimates for WDC are $4.03/$4.09.

The risks? Analysts are keeping an eye on WDC's ability to maintain prices and secure required components.

The First Call mean rating for WDC is: Hold [19 firms]. Mean 2008 target: $38 [high: $49, low: $32].

Stock Analysis: Western Digital is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from WDC's shares. Sell/Stop Loss if you were to purchase shares in this company: $19.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: computers, DVD players, growth stocks, hard drives, PC, WDC, Western Digital