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Western Digital Ready to Rumble

David Becker
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Western Digital Corp (NASDAQ:WDC) develops, manufactures, and sells storage products and solutions that enable people to create, manage, experience, and preserve digital content. Yesterday the stock was upgraded at JP Morgan to Overweight from Neutral.

On October 17, 2013, Western acquired Virident Systems, Inc., a provider of server-side flash storage solutions for virtualization, database, cloud computing and webscale applications; the company continues to enhance its competitive position in flash storage. During the fiscal first quarter, sales of enterprise SSDs increased 51% relative to the year-ago quarter.

The 52-week range of WDC is $37.30 – $79.89, and the stock price hit a 52-week high this week. The year over year quarterly earnings per share increased 41%, while the three year growth rate of earnings increased 27%. Sales declined 6% quarter over quarter but the three-year growth rate of earning increased 23%. The company has a very reasonable price to earnings ratio of 15, and a profit margin of 10.8%.

Recent insider buying makes the stock look attractive. Michael Cordano purchased 5896 share on December 10, 2013 for a total value of 254K. James Murphy and officer of the company purchased 2766 shares and 3480 shares on December 6, 2013 for a total value of 106K and 150K respectively.

The technical outlook robust as the uptrend in the stock place is solidly in place. The stock price is trading above the 20, 50 and 200 day moving average which reflect an uptrend. Momentum is strong with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory. The RSI (relative strength index) is printing near 65, which is on the upper end of the neutral range but below the overbought trigger level of 70.

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