The semiconductor shortage continues to wreak havoc on a number of industries. But other key tech components, and the companies that manufacture them, are also performing strongly right now.
That includes everything from server components to hard drives. There’s been a tug of war between those two businesses over the years, based on falling, and now rising, PC sales. The Covid-driven boom in PC sales has been particularly good for hard drives.
That’s where Western Digital (WDC) has been a winner. The company reported better-than-expected earnings this week, and also provided strong guidance for the upcoming quarter on strong hard drive sales.
Shares have cooled in recent weeks, moving from a high of $77 to around $65 when earnings dropped. Yet shares are still up nearly 50 percent in the past year, and the growth means shares now trade at less than 8 times forward earnings.
While revenue has been flat over the past year overall, the trend is up, and earnings growth has hit over 1,058 percent in the past year.
Action to take: Investors may like shares here in expectation of a move back to the old highs, although the company doesn’t pay a dividend at present.
For traders, the January $75 calls, last going for about $4.30, stand a good chance of a high-double to low-triple-digit return, especially if earnings remain strong over the next few months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.