We recently compiled a list of the 8 Best Stocks to Buy for High Returns in 2024. In this article, we are going to take a look at where Western Digital Corporation (NASDAQ:WDC) stands against the other stocks to buy for high returns.
The broader market reached new record highs on October 11, driven by financial stocks posting stronger-than-expected quarterly results. Adding to investor optimism is the recent decline in U.S. inflation, which dropped to 2.4% in September, moving closer to the Federal Reserve’s 2% target. This has fueled hopes of a potential quarter-point rate cut at the Fed’s November meeting. As of October 16, the S&P 500 stood at 5842.47, only eight months after surpassing the 5,000 mark for the first time. Additionally, the September Consumer Price Index revealed a sharper-than-expected rise in consumer prices. However, Omair Sharif, president of Inflation Insights, told Yahoo Finance that while inflation data exceeded expectations, housing inflation is beginning to cool. He also noted a significant decline in food prices since the post-COVID surge, suggesting there are several positive trends to take away from the current market situation.
Adding to that, Carson Group’s chief market strategist, Ryan Detrick, believes the current bull market is still in its early stages, with more gains to come. However, he doesn’t foresee a repeat of the strong returns seen in 2023 and 2024, when the S&P 500 rose 24% and 22%, respectively. Instead, Detrick expects more moderate growth, noting that the average gain for stocks in the third year of a bull market is around 8%, aligning with the typical annual return.
Meanwhile, Jay Woods, chief global strategist at Freedom Capital Markets, highlighted that one of the most striking aspects of the current bull market is how few investors believed in it from the start:
“I think it’s important to preface it with when it started, no one believed it. They just thought it was a bear market rally. And then they doubted that it had legs, and then it was just seven stocks. And now, all of a sudden, it is powerful. And I think the momentum is continuing. You got the rate cycle, you got broadening out, we have wind at our sails, and this bull market should last at least another 12, maybe 18 months.”
On another front, strategists warn that future market gains will hinge on identifying sectors with strong earnings growth. As Artificial Intelligence becomes a key driver of market performance, attention will turn to its impact on profitability across various industries. UBS notes that October has historically been the most volatile month for tech stocks, with the Nasdaq 100 showing an average volatility of 26% in October over the past 40 years, compared to 22% in other months. Given the current geopolitical uncertainties and concerns around export controls, the bank anticipates increased volatility in tech stocks in the near term.
Our Methodology
To compile our list of the best stocks for high returns, we focused on some of the top companies in Insider Monkey’s database that have ana average analyst upside of at least 30%. These companies were then ranked based on their upside potential, in ascending order. We have also mentioned the number of hedge fund investors that held stakes within each company in the second quarter of 2024, out of a total of 912 hedge funds.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A data center filled with racks of hard disk drives and solid state drives.
Western Digital Corporation (NASDAQ:WDC)
Average Analyst Upside: 31.59%
Number of Hedge Fund Holders: 80
Western Digital Corporation (NASDAQ:WDC) specializes in data storage technology, offering products like Hard Disk Drives (HDDs), Solid State Drives (SSDs), and Flash Storage devices, along with cloud storage solutions.
On October 25, Goldman Sachs raised its price target for Western Digital Corporation (NASDAQ:WDC) from $72 to $81, while maintaining a Neutral rating. The firm highlighted Western Digital’s strong first-quarter fiscal performance, noting record non-GAAP gross margins of 38.1% in its HDD division. The company’s enterprise SSD (eSSD) segment also achieved sequential revenue growth, despite challenges in the NAND market.
Looking ahead to the second fiscal quarter ending in December, Western Digital Corporation (NASDAQ:WDC) offered an upbeat forecast. Strength in the Data Center segment, including Nearline HDD and eSSD, is expected to offset slower demand in the PC, smartphone, and consumer markets, which face ongoing inventory issues.
In the second quarter, 80 hedge funds tracked by Insider Monkey held positions in Western Digital Corporation (NASDAQ:WDC), with combined stakes totaling nearly $4.06 billion. As of June 30, Millennium Management emerged as the largest shareholder, with a position valued at approximately $379.71 million.
Parnassus Mid Cap Fund stated the following regarding Western Digital Corporation (NASDAQ:WDC) in its Q2 2024 investor letter:
“We re-initiated a position in Western Digital Corporation (NASDAQ:WDC), a manufacturer of memory semiconductor chips and hard disk drives, as we believe earnings expectations are far too low. Semiconductors have been another of our most-alpha-generative industries, thanks to the industry’s secular tailwinds and our in-house expertise. Western Digital stands to benefit from the rapid growth of memory-hungry AI applications. The valuation for Western Digital was low relative to its peers, giving us a way to participate in AI at a reasonable valuation.”
Overall WDC ranks 8th on our list of the best stocks to buy for high returns in 2024. While we acknowledge the potential of WDC as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you’re seeking an AI stock with even more promise than WDC and trading at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.