Why Seagate Technology PLC (STX) Is a Buy on This Pullback

As you can see, Western Digital and Seagate Technology PLC (NASDAQ:STX) are fairly similar in many fundamental areas such as P/E and EPS. Areas where these two seem to separate are revenue/earnings growth and the dividend yield. Western Digital’s 5 year PEG of 3.88 is much greater than Seagate’s  –.78, indicating that maybe Seagate does not have any room to grow. However, Seagate’s annual dividend yield is more than double that of Western Digital creating an interesting income option.

Wrap Up

I believe the hard drive disk industry has great growth potential even as the solid state drive (SSD) and the cloud computing industries ramp up. (Wall Street does too as both companies have seen their number of shares short  decrease 23% month over month). Both companies produce a great amount of cash from operations and surprising revenue growth for an industry that apparently was irrelevant. The decision is now yours whether you prefer the great growth potential of Western Digital or the value play in Seagate Technology.

The article Why Seagate Is a Buy on This Pullback originally appeared on Fool.com and is written by Daniel Paterson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.