Hello Everyone,
As of Thursday, I have become an owner of WDC stock.
I have a few issues I was hoping some people here could clear up for me. They all have to do with WDC's seemingly low stock price.
Why is the price so low, and still dropping?
1) We are at a P/E of around 10 now, which seems low given the growth rate that this company should have. Unless I'm missing something, don't we all think that this is a growth stock? The PC market is expanding, therefore they should sell more drives? A lot more? Last I heard, every PC is shipping with a hard drive in it and a lot of them are WDC drives.
2) The company has Zero long term debt.
3) The company has a policy of buying back their own stock.
4) I don't understand why the Disk drive sector is "out of favor" with Wall Street. This seems to be a profitable business with growing demand. What more could you ask for?
5) WDC should also be able to take some market share away from Seagate, in my opinion.
6) WDC is a lot cheaper than QNTM with better fundamentals, and at this level is a better bet than Seagate. Seagate does have a lot of cash though.
7) Although, there's competition in this market because the companies all make similar products, it seems that the HD market has stabilized somewhat and everyone wants to avoid a price war. Of course, when too many drives are made, then dumping occurs which hurts everyone, but it everyone wants to avoid that as well.
If anyone has a list of negatives, I would love to know about it. In general my feeling is that this stock is cheap and I don't see any reason not to "back up the truck" on this one. Unfortunately, my truck is "backed into" other investments at the moment.
Good luck to everyone here and hopefully we'll all make some money.
Kevin |
