Western Digital Stock Rising As Sales, Profits Surge

When a company reports a 283% surge in earnings on a 29% hike in sales in its latest quarter, it gets investors attention. Computer storage systems maker Western Digital (WDC) did just that last quarter. On Thursday, the Relative Strength (RS) Rating for Western Digital stock climbed to 77, up from 64 the day before.

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The 77 RS Rating means that Western Digital stock has outperformed 77% of all stocks over the past year. That’s a good but not-yet great number. Market research shows that the top-performing stocks tend to have an 80 or higher RS Rating in the early stages of their moves. See if Western Digital can continue to rebound and clear that threshold.

Western Digital Stock Boasts Strong Composite

San Jose, Calif.-based Western Digital makes solid state and hard disk drives for personal computers and enterprise computer systems. Semiconductors have been in short supply, including solid state flash memory chips like those WD makes. As chipmakers ramp up production, computer makers also need the hard drives Western Digital makes.

Among its other key ratings, Western Digital stock has a strong 91 Composite Rating.

The Composite Rating combines five separate proprietary IBD ratings, based on key fundamental and technical criteria, into one easy-to-use score. The best growth stocks have a Composite Rating of 90 or better.

The storage systems maker’s 64 EPS Rating, of a best-possible 99, may improve. It’s shown rising profit growth in recent quarters. Of particular note, its Accumulation/Distribution Rating is B on an A+ to E scale, indicating moderately strong buying of its shares by institutional investors such as mutual funds and retirement funds. Because funds make about 70% of all stock trades, it’s a good idea to pay attention to what they’re buying.

Taking a look at revenue and profit performance, the company has posted rising EPS growth and sales growth over the last three quarters. In its most recent quarter it posted the 283% increase to $2.49 per share. Sales grew 29% to $5.05 billion. Western Digital is expected to release its next quarterly numbers on or around Jan. 28.

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While it’s not currently an ideal time to jump in, see if the stock is able to form a chart pattern and break out, such as a cup-with-handle base, or offers another buying opportunity like a rebound off its 50-day or 10-week line.

Peers In Storage Group

The company earns the No. 7 rank among its peers in the Computer Software-Storage industry group. Silicon Motion Technology (SIMO) and Seagate Tech (STX) are among the group’s highest-rated stocks.

When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.

IBD’s unique Relative Strength Rating identifies market leadership with a 1 (worst) to 99 (best) score. The rating shows how a stock’s price performance over the last 52 weeks compares to all the other stocks in our database.

Please follow James DeTar on Twitter @JimDeTar 

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