by Ian Harvey
January 15, 2019
Western Digital Corp (NASDAQ: WDC)
Western Digital stock sank 53.5% in 2018 becoming the worst-performing stock on the Nasdaq 100 Index; due to pricing for NAND memory falling, and shares continuing to lose ground amid steep sell-offs in the broader market.
But “Mentorship Program Members”, taking a put option, realized 102% potential profit.
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
The Details Presented Previously……..
The Details Presented Previously……..
Hard drive and solid-state storage specialist Western Digital Corp (NASDAQ: WDC) has witnessed a significant price decline in the past recent weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year.
The data storage veteran's stock is trading 55% below its 52-week highs, just 13% above its share price at the end of 2012.
For the full year, there have been eight
estimates moving down in the past 60 days, compared with no upward revisions.
This trend has caused the consensus estimate to trend lower, going from $11.71
a share two months ago to its current level of $7.30.
Also, for the current quarter, Western Digital has seen six downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to $1.59 a share from $3.19 cents over the past 60 days.
Also, in the past 90 days there have been 18 downgrades for Western Digital; with the latest with BidaskClub lowering shares of Western Digital from a sell rating to a strong sell rating in a report published on Saturday, December 8th.
Option trade to consider: Buy the WDC JAN 18 2019 37.500 PUT at approximately $2.00.
The Result So Far………
Share prices started to slide after the third-quarter report in April, even though the company beat Wall Street across the board and issued solid guidance for the next reporting period.
Analysts and investors were quick to conclude that Western Digital's days of coasting comfortably on a foundation of stable disk prices were ending, especially in the market for memory-based solid state drives (SSD).
The same worries resurfaced in the fourth- and first-quarter reports, driving Western Digital shares lower despite mixed-to-respectable results. End-user demand for data storage products is waning due to uncertainty about where the global economy is headed.
NAND chip supplies have now built up, prices are falling, and the company's hard-disk-drive business (HDD) business is in decline. The company's most recent earnings report showed its HDD shipments falling 19% compared to the prior-year period and dragging the company's total exabytes sold down 3% sequentially. With its core product categories facing pressure and not much immediate relief in sight, investors sold out of Western Digital in 2018.
So, for “Mentorship Program Members”, who managed to execute this trade recommended by Stock Options Made Easy; potential profits of 102% were available at the time.
Entering the option trade at a cost of $2.00 or less on Tuesday, December 18, 2018 when the stock price was near the $40.00 mark; and then exiting the option when it hit $4.05 and the stock price had sank to below $35.00; a potential profit of 102% was made. Therefore, one options contract would provide a profit of $205.00.
Now, Reasons to Consider Buying
Western Digital is under-going a significant shift in its business mix.
last 12 months, the company's revenue profile looks significantly different. In
fiscal year 2013, Western Digital was all about hard disk drives. In late 2015,
the company announced that it had reached a deal to purchase SanDisk, which
builds its own flash-based products and owned a significant stake in a
NAND-flash manufacturing joint venture. This allowed the storage specialist to
broaden its revenue base beyond hard disk drives.
Western Digital says that over the last 12 months, it has generated
$10.6 billion in revenue from hard disk drives -- down more than 31% from
fiscal 2013 levels. But this was more than offset by the fact that the
company's revenue from flash-based products was $9.9 billion over the last 12
Additionally, Western Digital's segment-level mix within hard disk
drives has shifted dramatically.
Western Digital is aiming for a compound annual growth rate (CAGR) of 4%
to 8%. The storage specialist says it's targeting gross margin on a non- GAAP
basis of 35% to 40%, and non-GAAP operating margin between 20% and 25%.
As well, Western Digital says that by fiscal year 2023, its total addressable market (TAM) within its core business -- in other words, hard disk drives and flash-based drives for a range of segments -- will collectively hit $111 billion.
Therefore, NEW Trade to consider……..
** OPTION TRADE: Buy WDC JULY 19 2019 40.000 CALL at approximately $3.70. Sell price is left to your own judgment.
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!
Strategies to Consider……
When To Exit A Trade Based On Earnings?.....Read Article
"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……
Our proven track record says it all!!
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