The latest Covid variant has led to a number of hefty lockdowns in China. In turn, that’s delaying supply chain issues that have already plagued a number of manufacturers in the past year and a half. It’s particularly troubling in the tech space.
That’s leading to investors shifting interest from companies away from China, or at least those cities in China under heavy lockdown. One of the biggest hit companies right now is Korean giant Samsung, which is now looking at a slowdown on chip output.
But their bad news is good news for Western Digital Corporation (WDC).
Shares have spiked higher in recent sessions, and the stock is now nearly trading on par with the S&P 500 over the past year. Revenue is up nearly 30 percent in the past year, and could fare better in 2022 if the company has more factory time open relative to competitors.
Action to take: Shares look attractive at 7 times earnings and likely have upside beyond short-term supply chain fears. Investors won’t get a dividend from shares, which looks like the only downside from here.
For traders, the April $75 calls are an inexpensive way to play this uptrend in shares. The options last went for about $3.00, and can deliver mid-to-high double-digit gains in the next few months on a continued rally.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.