Thailand is the center of disk drive manufacturing. Recent flooding in Thailand damaged a large number of manufacturing facilities resulting in a lack of adequate supply of disk drives.
Seagate [s:STX] is one of the largest manufacturers of disk drives in the world. Compared to the competitors, Thailand flooding left Seagate relatively unscathed. This gave Seagate an edge because it could steal market share from competitors.
Seagate has pre-announced better than expected earnings and projections. Seagate reports preliminary Q2 revenue of $3.1-$3.2 billion compared to consensus of $2.81 billion. For Q3, Seagate projects revenue of $4.2-$4.5 billion compared to consensus of $3.62 billion. Seagate CEO, Steve Luczo, credited strong performance to Seagate’s ability to take advantage of disruption caused by Thailand flooding.
As of this writing, Seagate stock is the fourth most active on NASDAQ and up about 8%.
Following are the four derivative plays to profit from Seagate’s good fortune.
Marvell Technology [s:MRVL]
Marvell is a leader in providing disk controllers to the industry. Marvell’s disk drive controller business had fallen off the cliff. Seagate’s numbers indicate that the business for Marvel is recovering. Marvell also produces semiconductors for the mobile space. The stock has moved up on the Seagate news, but is a buy on any major pull back.
LSI Corporation [s:LSI]
LSI is a competitor of Marvel. The stock has also moved up strongly on Seagate’s numbers. The stock is a solid buy on any pull back.
Intevac provides manufacturing equipment to the disk drive industry. Since a number of factories in Thailand have been…Read More at MarketWatch.