Diamonds and Dogs

4/11/16

Disk drives are back. Seagate (STX) is jumping 5% thanks to a positive article in Barron's magazine over the weekend. The former disk drive maker is in a down turn right now since no one is buying PCs right now. But thanks to plans to move into cloud computing, the fundamentals look brighter on the horizon. Couple that with a cheap valuation and a great dividend yield of 7.5%, and you can see why Barron's likes Seagate.

Hertz is hurting. Hertz Global Holdings (HTZ) fell 11% after issuing a warning to investors, expecting lower first quarter earnings while the industry as a whole has a supply glut. As a result, Hertz says fiscal year 2016 rental revenue should be flat or down 1.5%. The CEO said they are disappointed that the pricing pressure experienced late in 2015 further intensified in the first quarter of 2016. It looks like the  industry capacity will likely moderate as seasonal demand improves establishing the foundation for a relative improvement in pricing as we head into the peak summer season.