Two new buys this morning

I am nibbling on some FFIV and STX this morning.  Here’s the analysis behind STX. You got the FFIV analysis on Tuesday. Just buying a little common on FFIV to get started and buying some March STX calls with strike prices right around the current quote.

I’ve been reading Robert Marcin’s cut-throat analysis since I first stumbled across a profile of his remarkable track record and his management style back in the late 1990s. I never forget the time I met Bob Marcin. It was at a party  on Wall Street in JP Morgan’s old office for TheStreet.com contributors like Marcin and me. He came up to a Finnish telecom analyst who wrote for the site as we were sipping scotch and said to him, “I told you XYZ was cheap! It’s up five fold since you and I argued on the site about it.”

And then he walked off. Like I said, Bob can be cut-throat. He don’t mess around. And he’s by far the single best value stock picker I’ve ever seen. So when I saw this headline “Seagate: Cheap Stock, Great Chart” and this start to his latest column onWallStreetAllStars.com, my interest was immediately piqued:

“Every once in a while one my deep value style comes across a name that is compellingly cheap despite a big move and a good chart. Seagate is that stock, right here right now.”

I’ll quote some more from his STX analysis because it is spot on and I think it’s still time to buy some STX calls for a trade:

“At $18, the stock trades for only 10x’s earnings…….for this QUARTER. Because of the Thai flooding and the Samsung deal, Seagate will have blowout profits this March quarter, and in calendar 2012 as well. I am estimating around $6-7 in eps this year. I also expect the company to generate $3 billion in free cash flow which will be returned to shareholders via CEO Steve Luczo’s excellent capital allocation program.”

Think about that — a tech stock trading at 10x this quarter’s (not this year’s) earnings. Hmm. Here’s more from Marcin:

“So where can the stock trade on these profits? Well, at 8x’s normalized profits, Seagate would be $40. At a 4% dividend yield, still rich in this environment, the stock would be $37.50. Do you want to avoid this $18 stock because Wall Street is worried that Seagate’s current annualized $8 eps run rate is unsustainable? I don’t think so.”

I later noted that the best tech trader I know, Jay Somaney, also bought some Seagate calls here:

I agree with Marcin’s analysis. They are set to make a splash at CES. I am buying STX options. Easing in but buying.”

You don’t often get both the best value investor and best tech trader you know buying the same stock at the same time. Here’s hoping I don’t jinx ‘em.