Grab Some Seagate Mate
Seagate Technology (STX) trading around $27 looks interesting to me. Its had a huge move already in the last 6 months, but is expected to earn $8.66 in 2013 on the average estimate of 17 analysts following. The range of analyst estimates for 2013 is pretty wacky, $4.57 to $12.78.
Seagate does have about 3 billion in long term debt but in the last quarter they paid off $500 million in ST debt, so they have the cash generating ability to get the debt in line. They generated $879 million in operating cash flow in QE DEC 2011 on revenue of $3.2 billion. I project they could cut their LTD in half by the end of 2013 to around 1.5 billion if they maintain their focus on the balance sheet. This should give them a window to clean up the balance sheet if borrowing costs rise in 2-3 years.
If we assume they earn even just $6 next year at a P/E of 10...we are looking at a $60 stock in the next 12 months. I think this is a pretty conservative projection. Since when is 100% return conservative? I guess with Seagate mate.