Seagate Technology PLC (STX): Don’t Fear the Uncertain Future of This Company’s Technologies

Looking at the alternatives

There are many players in the hard disk and storage business, but only a few with the size and products to make a reasonable comparison to Seagate. Western Digital Corp (NASDAQ:WDC) and SanDisk Corporation (NASDAQ:SNDK) are two that have gone about adapting to the changing computing environment in different ways.

Western Digital Corp (NASDAQ:WDC) is roughly the same size as Seagate in terms of market cap and became the world’s largest manufacturer of traditional hard disk drives after acquiring Hitachi Global Storage Technologies last year. The company trades at an even cheaper valuation of 8.4 times this year’s expected earnings, but I prefer Seagate for two reasons. First, Western Digital Corp (NASDAQ:WDC) pays a much lower dividend yield of 1.43%. Second, I really like Seagate’s history of innovation. In terms of the quickest, biggest, and best hard drives, Seagate tends to get there first, which is huge in the technology sector.

SanDisk is about the same size, but has a much different product line. SanDisk Corporation (NASDAQ:SNDK) designs and develops flash memory products only, such as SSDs, memory cards, flash drives, and more. As there is much less concern about the future viability of SanDisk Corporation (NASDAQ:SNDK)’s products, shares trade at a higher (but still reasonable) valuation of 13.5 times 2013’s earnings. This is not quite an apples-to-apples comparison, but I wanted to mention one of the pure flash-memory plays to show the power of market uncertainty when it comes to valuing companies.

Buy, sell, or hold?

Although it is not quite the bargain that it was six months ago, Seagate Technology PLC (NASDAQ:STX) is still a very good value, and is absolutely the best-in-breed when it comes to traditional hard disk drive manufacturers. While it is completely reasonable for those who have held through all of the recent gains to sell some of their position and take profits, Seagate should provide great returns for its shareholders for years to come and deserves to be owned.

The article Don’t Fear the Uncertain Future of This Company’s Technologies originally appeared on Fool.com and is written by Matthew Frankel.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool owns shares of Western Digital. Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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