Apple Inc. (AAPL): The Personal Computer Has Perished, Purchase Hard Drives?

Industry dinosaurs

Seagate and Western Digital are best known for the hard drives that go into PCs, but clearly storage is in demand to support the growth of the Internet, too. A PC slowdown will hurt them, but that could be a blessing for investors looking to take advantage of the Internet’s growth.

Since hard drives remain the cheapest storage alternative, server farms will likely continue to make use of this “old” technology for some time yet. And, as a backup, both companies have been dipping their toes into newer technologies.

After a notable share price advance in the last year or so, Seagate recently yielded around 3.5%. Western Digital, benefiting from a similar advance, yields around 1.5%. Both, however, have taken a hit from the PC sales news that could give investors another chance to climb aboard.

Seagate has focused on returning value to shareholders via dividends and stock buy backs, which makes it more appropriate for growth and income investors. That said, the heavy return of cash could limit its financial flexibility over the long term. Western Digital, meanwhile, has focused on shoring up its finances. With a lower yield and a better balance sheet, Western Digital is probably most appropriate for growth minded investors.

More than a PC

The technologies we rely on today demand so much more than just a PC to operate. That requires investors to think beyond what sits on their desks. Hard drive makers still offer the most cost effective option for storing all of the “stuff” we enjoy online. View the recent PC sell off as a potential buying opportunity.

The article The PC Is Dead: Buy Hard Drives originally appeared on Fool.com.

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