This Memory Stock Is Set to Fly Higher
Today’s stock represents a good example of a “picks and shovels” play on the technology sector. The company has a great product that is in high demand, and the future growth trajectory points towards further triple-digit gains. Such stocks should be considered by investors, since they provide a great opportunity to ride the prevailing trend and gain handsomely in the process.
Western Digital Corp (NASDAQ:WDC) is the world’s leading provider of data storage solutions. The company’s innovative products are at the center of the world’s largest data centers, and they make their way into advanced smartphones, tablets, and personal computers (PCs). Western Digital’s storage solutions enable huge possibilities for cloud computing and other sophisticated infrastructures.
I am bullish on Western Digital stock for the following reasons.
As the amount of digital information in our lives goes on increasing at an exponential rate, there will always be demand for innovative storage solutions to take care of this huge pile of data. And Western Digital is at the forefront of this. Its hard drives are used in PCs, consumer electronics, and digital video applications. And, with recent efforts, the company is making inroads into another high potential growth area.
This promising opportunity for the company is “3D NAND,” which is a type of memory that is used in smartphones, tablets, and other portable devices. This advanced technology has huge potential in the mobile space, as 3D NAND memory chips are increasingly being used due to their multiple benefits at a lower cost. Western Digital stock has been gaining on account of this optimism.
As the data-driven economy around us grows, companies like Western Digital stand to benefit from the increasing number of connected mobile devices in the world, as well as from the rising need for storage of digital content. As the demand for NAND flash memory remains strong, the company’s focus on conversion to this technology should further expand its product portfolio and markets.
Last year, the company completed the acquisition of SanDisk Corporation (NASDAQ:SNDK), a global leader in NAND flash storage solutions, in order to strengthen its presence and deepen its expertise.
According to a research report by Allied Market Research, the 3D NAND flash memory market is expected to reach $39.0 billion by 2022. It further states that the increase in storage demand across sectors like consumer electronics and enterprise storage is the major driver of the 3D NAND flash memory market. (Source: “3D NAND Flash Memory Market by product and application – Global Opportunities Analysis & Industry Forecast, 2014-2022,” Allied Market Research, December 2016.)
Western Digital is well positioned to grow and thrive in this market. There are a lot of changes taking place in the data storage industry, and the company stands to gain from these new opportunities as a broad-based provider of data storage technologies, devices, and solutions in different markets.
The company announced impressive third-quarter results in April this year. The non-generally accepted accounting principles (GAAP) earnings came at $2.39 per share as compared to $1.35 per share in the year-ago quarter. Western Digital generated $1.0 billion in cash from operations during the quarter, and has reported three consecutive quarters of strong financial results following the SanDisk acquisition. (Source: “WESTERN DIGITAL ANNOUNCES FINANCIAL RESULTS FOR THIRD FISCAL QUARTER 2017,” Western Digital Corp, April 27, 2017.)
The impressive results were on the back of strong demand for its products. This has been evident in the phenomenal rise of the Western Digital stock price.
WDC stock has earned over 30% year-to-date as compared to the S&P 500 index, which has gained about 10% in the same time period. The stock has gone up by almost 90% over the past year and has posted astounding gains of almost 189% in the last five years.
Chart courtesy of StockCharts.com
Thanks to the current healthy market environment, together with unlimited opportunities, Western Digital stock is likely to continue its streak of posting triple-digit gains.
The Bottom Line on Western Digital Stock
This picks-and-shovels stock is a dominant player in the data storage industry, with more exciting things planned in the year ahead. The year 2016 was a transformative for the company, since it not only posted strong results, but also acquired SanDisk. The company has announced next-generation memory technology and many other innovative products for the coming years.
Western Digital’s vast portfolio of high-quality storage solutions and new products in the pipeline bode well for WDC stock. Its diversified product offerings and technology assets make it a formidable player on a global scale. The focus is now on the transition to 3D NAND technology as well as alternative technologies, and the company’s management team is confident of the successful execution.