WDC
In the article I wrote a couple months ago, Western Digital Corp (WDC) - 1 Year Later, I made this note at the end:
Something interesting to note. WDC has continually grown their book value every year. It has never dipped. Its median annual growth is 47%. If they continue the trend and their book value grows by 35% for 5 years, their 2015 book value would be $86.86. Every stock trades for a price of at least their book value and only that low when the company is going bankrupt. A stock price of $86.86 in 5 years represents a yearly gain of 16%.
This idea has stuck with me. I believe it to be valid. I made a note to re-evaluate if WDC went below $35. It has.
The big question here would be if WDC can continue to increase their book value for 5-years at an average annual growth rate of 35%. They have done better than this for each of the past 10 years. The book value has never declined, even when earnings have. If book value climbs to $86 over the next five years, the stock price will rise a minimum of 20% annually.
Under $35, WDC looks like a great deal. I have no available cash to make a purchase but I definitely would if I could.
