Why Seagate Technology PLC Will Keep Soaring in 2014

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Seagate Technology PLC climbed slightly on Tuesday after Morgan Stanley upgraded the hard disk drive technologist from Equal weight to Overweight.

So what: Along with the upgrade, analyst Katy Huberty planted a price target of $72 on the stock, representing about 18% worth of upside to Friday's close. While value investors might be turned off by the stock's surge since the summer, Huberty believes there's plenty of room to run given his view that Seagate's recent operating momentum is only getting stronger.

Now what: Morgan expects Seagate's margins to continue to expand on improving volumes and a more favorable product mix. "We model 20 bps of gross margin expansion in FY15 to 28.7%, as enterprise/cloud mix is partially offset by the lower margin Xyratex business in the near-term," noted Huberty. "Industry consolidation and stable fundamentals expand the P/E multiple to the low-end of similarly consolidated industries (CPUs and HBAs)." Of course, when you couple the stock's red-hot price action (up nearly 110% from its 52-week lows) with its extremely volatile nature (beta of over 3), conservative investors might want to maintain their distance.

More reliable ways to build wealth
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

The article Why Seagate Technology PLC Will Keep Soaring in 2014 originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.