Selection for this week
Some Pros about the stock
Some Cons about the stock
Why the Quants like this stock
Criteria for choosing
The previous selections
The momentum stocks in the portfolio as a group were were up a little since last Thursday. This is the 20th stock added to the model portfolio. So far, there has not been any stocks removed for cause.
Starting next week, this model portfolio will be added to the free newsletter and the weekly performance will be tracked along with the Quant Alpha’s II, Quant 30, Quant Dividend and Growth 25 and Quant Alpha’s – Legacy portfolio’s already in the newsletter. A separate email revealing the new selection for this model portfolio will continue to issued on Thursday.
Add: STX (Seagate Technology) – Computer Hardware
What does the company do?
Seagate Technology Holdings plc is a global data storage company that develops and provides a wide range of storage solutions, including internal and external hard drives, solid-state drives (SSDs), enterprise storage systems, network-attached storage (NAS) products, and specialized drives for video, surveillance, hyperscale, and cloud applications. Its products serve industries such as healthcare, media and entertainment, telecommunications, and security. Seagate primarily sells through original equipment manufacturers, distributors, and retailers. Founded in 1978, the company is headquartered in Singapore.
Why Some Investors Are Bullish
Record fiscal year and accelerating financial results.
Seagate generated a record $12.2 billion of revenue in fiscal 2026, while GAAP net income reached $3.18 billion. Non-GAAP diluted EPS was $15.58 for the year. Fourth-quarter revenue reached $3.6 billion, with non-GAAP EPS of $5.71 and non-GAAP gross margin of 52.7%.Record margins demonstrate strong operating leverage.
Seagate’s fiscal 2026 non-GAAP gross margin reached 46.1%, with Q4 expanding to 52.7%. The company has been benefiting from improved pricing, product mix and the ramp of higher-capacity storage products, including its Mozaic HAMR technology. The combination of stronger demand and higher margins has significantly increased earnings power.Strong free cash flow supports debt reduction and shareholder returns.
Seagate generated a record $3.1 billion of free cash flow in fiscal 2026. The company reduced debt by $1.4 billion during the year, ending the period with $3.6 billion of total debt and $1.7 billion of cash and cash equivalents. It also returned $810 million to shareholders through dividends and share repurchases.AI is creating a structural demand driver for storage.
The rapid expansion of AI and cloud infrastructure is generating enormous amounts of data that must be stored, making high-capacity HDDs an important part of the data-center storage architecture. Seagate’s focus on mass-capacity storage gives it exposure to this long-term trend.Wall Street expectations remain elevated.
Several analysts raised their Seagate price targets following the July earnings report. For example, Argus raised its target from $750 to $900, while Barclays raised its target from $1,000 to $1,250; other firms also increased their targets.
What Bears Are Worried About
Valuation has become demanding after an enormous rally.
Seagate’s shares have risen dramatically, and by late September 2026 the stock was trading around $900 per share, with a trailing P/E around 66x based on reported market data. The forward multiple is considerably lower, but the valuation still assumes that Seagate can sustain a significant portion of its recent earnings growth.The stock remains highly volatile.
STX has experienced substantial price swings as investors reassess AI infrastructure spending, HDD pricing and future earnings growth. The stock reached a 52-week high of approximately $1,145 in June before pulling back below $1,000 in September. That volatility can create significant upside as well as downside for shareholders.HDDs remain a cyclical business.
AI and cloud demand may be creating a powerful growth opportunity, but the hard-drive industry has historically been cyclical. Pricing, supply and demand, customer inventories and data-center capital spending can all change rapidly. The investment debate is therefore whether Seagate’s current AI-driven storage boom represents a durable structural growth cycle or an unusually strong phase of a still-cyclical industry.
Why the Quants like this stock
PEG Non-GAAP (FWD) A+ 0.38
Revenue Growth (FWD) A 40.27%
EPS FWD Long Term Growth (3-5Y CAGR) A+ 67.08%
Return on Common Equity (TTM) A+ 371.53%
6M Price Performance A+ 154.49%
FY1 Up Revisions (last 90 days) 20 Up and 0 Down
Latest Quarter’s Earnings
Announce Date 7/28/2026
EPS GAAP Actual $5.58 (Beat by $0.77)
EPS Normalized Actual $5.71 (Beat by $0.62)
Revenue Actual $3.63B
Revenue Surprise Beat by $137.68M
My View
Seagate has transformed into an important way for investors to participate in the AI-driven expansion of data storage. Fiscal 2026 produced record revenue, margins, free cash flow and debt reduction, while the company’s Mozaic technology and high-capacity HDDs are positioned for continued data-center demand.
The biggest issue for investors is valuation versus sustainability: STX has already experienced an extraordinary run, so maintaining strong earnings growth, margins and free cash flow will be increasingly important to justify the current valuation. As of late September, the stock remained well below its June high despite still-elevated analyst expectations.
Top Quant Stock of the Week Criteria
I am using a Quantitative research platform that provides a daily list of top-ranked stocks to buy or sell, based on a Comprehensive Quant Score. This Quant system uses computer algorithms to come up with its rankings. This score incorporates multiple factors, including valuation, growth, profitability, momentum, and EPS revisions.
I will be giving heavy weight to strong momentum and strong EPS revisions to make the weekly selection. Then, I will use my tested proprietary criteria to sort and then break any tie.
One stock will be selected each week. That would make 52 selections a year if I don’t miss any weeks because of internet problems.
The hold times for the stocks added will be 1 week to years. Although a 1 week hold would be rare, it could happen if the stocks Quant metrics took a big nose dive right after being selected. If an added stock maintains its good metrics, it will be kept in the portfolio until it doesn’t. No time limit. The Quant system will tell me when it is time to let it go. So the hold time is short, medium and long depending on the Quant system metrics.
All countries are included. ADR’s are ok but Pink Sheet stocks will not be allowed.
Certain Industries are excluded. My testing shows they do not perform well using Quantitative rankings. Two of the main ones are BioTechnology and Pharmacueticals.
The Remove Criteria: Once the stock no longer qualifies to be retained in the Portfolio, it will be removed. This could be because the companies metrics have deteriorated since selection, it is involved in a buyout or financial reporting problems.
Once a stock has been added to the Active list, it will not be added to. No doubling down.
The stocks considered are larger small cap, mid cap, large cap and Mega cap. They will be fairly easy to trade with opening or closing market orders as one of the ways to enter and exit positions.
It should be expected that about 50 stocks will be Active in the Portfolio in any given week, once it gets to the two year mark.
All stocks are added as equal weight. No rebalancing is to occur.
To be considered for addition, the stock has to be in the top group of Quant rankings for just several weeks. This is to allow newly upgraded stocks to qualify quickly. Hopefully, this will catch a couple of strong momentum stocks early in their move.
Once a stock is removed for cause, it can be added back in once it meets the add criteria. No waiting period is required.
There will be no limits on percentages of stocks in the Portfolio by Sector or Industry.
Previous Selections:
For a look at the live scorecard for Position Trader, see the google doc link below.
It has the Live performance numbers and some links back to more information about the three Quant stock Model Portfolio's.
https://live-scorecard.position-trader.com/
Other links:
https://positiontrader.blog/four-model-portfolios/#weekly
https://positiontrader.blog/four-model-portfolios/#30
https://positiontrader.blog/four-model-portfolios/#dividend
https://positiontrader.blog/four-model-portfolios/#top
https://positiontrader.blog/four-model-portfolios/#legacy
https://docs.google.com/document/d/1P2W1994O6SXvb4qfx2fqCFXnJSbPH3KJWQvqrGNqmCw/edit?tab=t.0