NEW BULLISH Plays
Seagate Technology - STX - close: 65.54 change: +0.92
Stop Loss: 62.45
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on November -- at $---.--
Listed on November 20, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 2.7 million
New Positions: Yes, see below
Why We Like It:
STX is in the technology sector. The company makes hard disk drives, solid-state drives, and additional computer memory and storage systems.
STX's main rival is Western Digital (WDC). The two have something of a duopoly on the global hard drive and storage business. STX has suffered a bit of a public relations problem when a study came out earlier this year that showed WDC's hard drives had a longer (average) life span than STX drives. The news has helped WDC steal some market share from STX but both companies are still seeing strong growth.
Back in July STX announced their Q4 results and guided higher for their Q1 (calendar Q3). The company's Q1 numbers were better than expected and above their July guidance thanks to big demand for their PC, gaming, and cloud storage products. Management noted they are definitely seeing better than expected momentum in their cloud-computing systems.
STX's most recent earnings report was October 27th. Wall Street expected a profit of $1.24 a share on revenues of $3.6 billion. STX beat both estimates with a profit f $1.34 a share and revenues of $3.79 billion. The EPS number was up +22% from the prior quarter and up +4% from a year ago. Revenues were up +8.5% from a year ago and up +15% against the prior quarter.
Management said they have confidence in their future cash flow generation which is why they raised their quarterly dividend from $0.42 to $0.54.
STX's guidance for the current quarter is $3.7 billion in revenues, which is above Wall Street's estimate.
Technically shares have recovered from a brief November pullback and now the stock is hitting all-time highs. The point & figure chart is bullish and forecasting a long-term $94 target.
Today's breakout past resistance at $65.00 looks like a bullish entry point. I'd like to see just a little bit more confirmation. Tonight we are suggesting a trigger to open bullish positions at $65.75.
Trigger @ $65.75
- Suggested Positions -
Buy STX stock @ $65.75
- (or for more adventurous traders, try this option) -
Buy the 2015 Jan $65 call (STX150117c65) current ask $2.67
Option Format: symbol-year-month-day-call-strike