Seagate Technology (NASDAQ: STX) stock was not expected to advance as quickly as it has: but under these investing conditions, we'll take it. In fact, Seagate's stock chart has been a stairway to heaven, which is why I'm Reiterating my Buy rating for the company, first recommended on July 8, 2009 at a price of $9.50. If you purchased Seagate's shares then, you're up an impressive 63%.The Buy rating in July for hard disc drive manufacturer Seagate was based largely on the company's demonstrated business model, and the calculation that traditional, desktop, bulky PCs will continue to dominate the computer market, led by office purchases, for the next three to five years, and probably longer, despite the steady increase in mobile devices/platforms. The mobile cubicle may be on the rise, but the office cubicle isn't disappearing.
Institutional investors (IIs) have apparently been thinking the same thing, as Seagate's stock chart has not come close to its 50-day moving average since the July call - a sign that IIs are continuing to add to their STX positions. Demand for computers is already increasing in emerging markets: do you think the IIs know something about future computer demand, globally? The view from here argues they do.
The First Call FY2009/FY2010 EPS estimates for STX are $1.88 to $2.10, but that FY2010 estimate will most likely prove to be a tad low. And if it does prove to be low, STX will be at $25 before the spring 2010.
Stock Analysis: Seagate Technology is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in STX now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your STX position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $4.25.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
10-16-2009 @ 5:16PM
jake192168 said...
thats nothing check out neom. this thing is gonna rocket soon. great technology and wide use will drive it.