An Overlooked Player in Computing Points to Further Profits Ahead

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  • With most of the tech space focused on the semiconductor shortage, a few areas are performing well in spite of the industry effects. One area? Memory. From solid state drives to flash drives, demand for storing more and larger amounts of data has remained constant.

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  • That’s great for companies that produce these products. And based on the latest earnings numbers, it’s clear that these companies are in an uptrend.

    For instance, Western Digital (WDC) just reported better-than-expected financial results. While revenue was down 1 percent from a year ago, the company greatly exceeded on earnings. Even with some issues in the semiconductor space, the outlook for memory data looks strong.

    Shares of the company are now up 75 percent over the past year. But thanks to strong earnings, WDC now trades at 11 times forward earnings.

    Action to take: Investors may like shares here given the tech trends of the next few years, which could lead to a significantly higher share price. The company has historically paid a modest dividend, but suspended it last year. It may reinstate it in the coming quarters.

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  • For traders, the July $72.50 calls look like a good way to play the current uptrend. The option stands an excellent chance of moving in-the-money based on the current uptrend. Last going for about $4.80, the options can deliver mid-to-high double-digit returns in the coming weeks.

     

    Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.