Most stocks are having a rough start in 2014. This should not be a shock considering the international dynamics in the stock market, plus the DJIA rose more than 26% and the S&P rose more than 29% in 2013. Earnings season also proved to be very selective in terms of winners and losers. And now emerging market currency concerns remain a risk while the Federal Reserve gets out of the quantitative easing game and bond buying game.

24/7 Wall St. has seen mixed trends in technology, and thinks it is time for investors to consider yet again whether or not it is time to start taking money off the table in the areas such as drives and storage and memory. If the PC sector trends remain challenged, and with 1 Terabyte of external storage now selling under $80, the trends have to be considered.

We first issued this concern around the Western Digital Corp. (NASDAQ: WDC) earnings report, and before the earnings had been issued by Seagate Technology PLC (NASDAQ: STX). The reality is both are solid companies now and both have acquired their way into what could end up being a duopoly. The flip side is that valuations caught up and then surpassed what they should have been.

Again, not all is bad here. The growth of the sector is not dead per unit, even if prices remain in decline. These stocks outperformed the broad market handily. Turnarounds have been realized, and valuations have gone significantly higher with the bull market.

Western Digital Corp. (NASDAQ: WDC) and Seagate Technology PLC (NASDAQ: STX) compete head to head for drive and storage markets. There is still a declining PC market, hurting drive sales. Elsewhere, personal storage is on the rise even if cloud storage services exist.

Western Digital managed to beat its earnings estimates. Unfortunately, the company warned on earnings by a slight amount ahead. Seagate had a slight drop in earnings, and missed its earnings expectations marginally. Based upon these stocks having performed well in 2013, and based upon these being considered in the permanent value bucket, investors packed their bags and left.

Western Digital and Seagate shares are both up close to 100% in the past year. Regardless of valuations, stocks that double generally have to keep impressing handily to drive new investor interest.  Western Digital and Seagate both traded at close to 11 times expected earnings when we brought up the first issue on January 23. While that is cheap on the surface, the past concerns about the imminent death of disk drives due to flash drives once had these valued at a mere 5-times to 8-times earnings.

On January 23, Western Digital shares were closer to $87 and Seagate was closer to $61.00. Now Western Digital is under $84.00 and Seagate is closer to $51.00. Western Digital trades now at closer to 10-times expected earnings versus 9.9-times for Seagate.

Seagate’s dividend yield is now over 3% due to its larger drop, and Western Digital yields closer to 1.5%.

It is hard to imagine that these could trade for 5-times earnings again, but a multiple of 8-times or 9-times earnings is not out of the question. Investors and traders could expect that if valuations are going to normalize further in a market sell-off or at least a breather, then Western Digital could have another $10 of potential downside and Seagate could still have another $5 or $6 downside. At that point, bargain hunters would likely start throwing in major support for these stocks again.

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