2 Tech Outperformers To Buy: Seagate Technology PLC (STX) and SanDisk Corporation (SNDK)

Data centres would naturally prefer to switch to SSDs, as they would be required to setup less number of servers for data intensive services. Vrident is currently the technology leader in PCIe SSDs and this move to cater to the data centres would greatly benefit Seagate.

Additionally, shares of Seagate offer an attractive dividend yield of 4.3%, with a modest payout of 18%. The company enjoys the highest net margins amongst the mentioned peers, and it has clearly outperformed its peers in terms of stock appreciation, over the last 3 years. Still its shares appear to be deeply undervalued.

Reasons to Buy SanDisk

SanDisk is the global leader in Flash Memory Storage technology, and is one of the most preferred brands in NAND chips for mobile devices (SD cards). A recent report stated that the market for SD cards is estimated to reach $21.3 billion by 2018, and this geographically diversified market leader looks well poised to take advantage of the global growth potential.

Its quarterly revenues from SSD shipments grew by a massive 95% YoY, and its gross cash and marketable securities rose to $5.7 billion, up by 5.4% on a sequential basis. SanDisk has also been outperforming its peers over the last 5 years, and the recent results only corroborate that its growth momentum is solid and genuine.

Foolish Conclusion

In my opinion, investors should avoid OCZ Technology due to its continued poor financial performance. Its shares are down by 52% over the last 3 years and its management has still not come up with a solid turnaround plan. I believe OCZ Technology would make a poor contrarian play, due to the absence of almost any positive trigger. Needless to say, SanDisk is a growth pick here. But Seagate appears to be a value play! Its restructuring of operations to align itself with changing market conditions, which offers great growth potential. As you might have guessed it, both Seagate and SanDisk get a Foolish Buy Rating.

The article 2 Tech Outperformers To Buy originally appeared on Fool.com and is written by Piyush Arora.

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