Seagate Technology PLC (STX): Sell These Storage Makers, Buy This One

Flash storage: more promise

Unlike the hard drive makers, SanDisk Corporation (NASDAQ:SNDK) issued solid guidance for the current quarter. Instead of guiding on the consensus of $1.49 billion in revenue, SanDisk thinks it can generate revenue as high as $1.575 billion. In the last quarter, prices for NAND flash continued to be strong. This helped the flash drive maker report a gross margin of 46.7%. This represents an 18.4% improvement compared to last year.

The company earned $1.21 per share, beating estimates by a full $0.28 per share. Sales grew 43% year-over-year to $1.48 billion.

Foolish bottom line

Every time investors speculated that hard drives were just commodities, the underlying companies sold off. Western Digital Corp. (NASDAQ:WDC)and Seagate Technology PLC (NASDAQ:STX) then traded to new heights. It might be time to consider that these companies reached a peak. By selling these shares, investors could focus on the NAND flash market, which has better growth characteristics. Demand for flash storage is still growing, thanks to a sustainable growth in demand for mobile devices like smartphones. This implies that the pullback in shares of SanDisk should be viewed as a buying opportunity.

The article Sell These Storage Makers, Buy This One originally appeared on Fool.com.

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