So, even in spite of consensus beating quarterly results,several analyst upgrades and a jump in its stock price, I will have to agree with Craig-Hallum’s Christian Schwab: at over $43 per share, I would wait for a better entry point if considering to invest in Seagate Technology PLC (NASDAQ:STX). Furthermore, aggressive insider sales dissuade me even further from buying this stock.
Setting aside the headwinds and long-term threats, the firm’s 3.53% projected dividend yield and strong margins, returns and growth figures make this firm worth keeping an eye on, particularly as the second half of the year unfolds and shows the future of the PC and laptop demand.
Teradata: A data warehousing provider
Teradata Corporation (NYSE:TDC) is the world’s largest enterprise data warehousing provider, and its portfolio also includes enterprise analytic technologies and services. Although newer database and analytics technologies are arising, I would still recommend BUYING this stock as the company’s high-end products and high switching costs for its customers provide it with an economic moat to keep competitors lagged and help the firm retain clients –including Apple, Wal-Mart and eBay, amongst many others- going forward. Meanwhile, its stock price has been experiencing a downtrend over the last few months, providing an attractive entry point for investors; trading at 24.6 x P/E, a 33% discount to the industry average, while offering great margins and returns (see table below), strong financials, an EPS growth forecasted at 13.6% per annum over the next five years and a history of growth backing its prospects, this is a value stock you should miss on.
Moreover, as data volumes increase, Teradata Corporation (NYSE:TDC) should benefit from higher data analytics corporate budgets, mainly because big companies have increasingly “valued operational data as a strategic asset […] to drive supply chain efficiencies, manage inventory, enhance customer service, and shorten sales cycles” (Morningstar). New strategic partnerships and strengthening relationships with large customers -like Microsoft, eBay, Oracle, IBM, AT&T, Best Buy and P&G, to mention a few- should also provide plenty of upside for the longer term. Furthermore, its strong balance sheet and cash position will serve for future acquisitions, a strategy that has proven highly profitable in the past.
Bottom line
Both EMC Corporation (NYSE:EMC) and Teradata Corporation (NYSE:TDC) are fairly moated companies that offer not only compelling stability, but also attractive and sustainable growth expectations. Trading below average valuations while having a bright future ahead of them, these are two investment opportunities that look too attractive to pass on. Seagate Technology PLC (NASDAQ:STX)´s case is a little different: dominating in a soon to decline industry, its short and medium-term outlooks seem promising, but its longer-term viability and profitability seem quite questionable.
The article 3 Data Storage Companies You Shouldn’t Miss originally appeared on Fool.com and is written by Damian Illia.
Damian Illia has no position in any stocks mentioned. The Motley Fool recommends Teradata. The Motley Fool owns shares of EMC. Damian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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