You knew the day would come when so much data, content, music, video and so much more are looking for a place to reside that storage protocols and standards would start to change. A new report from UBS says that the evidence is accumulating that first high-end, and then later mid-range enterprise storage will shift from disk to hybrid to all-flash arrays.

For the record, an all-flash array is a solid-state storage disk system that contains multiple flash memory drives instead of spinning hard disk drives. The UBS team points out that 451 Research reports all-flash arrays (AFAs) use has risen from 6% of enterprises in 2013 to 22% today. They also cite the fact that over 40% of chief information officers see the need for AFA storage. The NAND flash suppliers are the big winners, and disk drive makers that already have been pummeled this year could be in big trouble. The UBS team thinks three top companies are poised to benefit, and all are rated Buy.

Intel

This top chip company has been in the doghouse on Wall Street all year, and the recent very positive earnings report certainly has helped to lift the pall hanging over the company. Intel Corp. (NASDAQ: INTC) is among the companies regarded as having among the highest shareholders cash returns, at approximately 8%, but it has lagged high-growth specialty chip stocks. The iconic chip giant had a stellar 2014 on the tailwind from continued personal computer (PC) sales, but this year has been a far different story. Despite a very positive second-quarter earnings report, the stock is down a gigantic 18.2% year to date.

Intel purchased chip rival Altera for $16.8 billion. Some on Wall Street view the deal pessimistically, citing its high cost, aggressive growth assumptions on the part of Intel and the increase in debt. Others feel the addition will help Intel start to move away from PC dependence, and it would put Intel into the traditional fabless market of programmable logic devices. By 2020, half of Altera’s product line could be manufactured at Intel facilities.

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The UBS analysts point out that Intel’s NAND flash memory business has a strong focus on enterprise opportunities. They also agree with many on Wall Street who are very positive on the company’s new chip, which is a collaboration with Micron Technology, called the 3D XPoint could be primarily In-Memory compute in servers, and its launch should coincide with Intel’s Purley platform server launch in 2016.

Intel investors are paid an outstanding 3.33% dividend. The UBS target for the stock is $32. The Thomson/First Call consensus target is $33.48. Shares closed Friday at $28.81.
Micron Technology

This top technology stock has been absolutely mauled this year. Micron Technology Inc. (NASDAQ: MU) trades at a 3.38 price to cash flow figure. Since January the stock is down a massive 50%, and over 30% since the end of June. Many on Wall Street feel at these lower levels the company is a potential takeover candidate.

Micron Technology is a global leader in advanced semiconductor systems. Micron’s broad portfolio of high-performance memory technologies, including DRAM, NAND and NOR flash, is the basis for solid-state drives, modules, multichip packages and other system solutions. The company’s memory chip solutions enable the world’s most innovative computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications.

Micron and Intel announced recently the availability of their 3D NAND technology, the world’s highest-density flash memory. Flash is the storage technology used inside the lightest laptops, fastest data centers and nearly every cell phone, tablet and mobile device. As noted above, the collaboration with Intel on the 3D XPoint also creates new opportunities in solid-state drives. The UBS team also thinks that Micron has the most room to improve in enterprise grade solid-state drive controllers, which include the electronics that bridge the flash memory components to the solid-state drive input/output interfaces.

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The UBS price target for the stock is $25 and the consensus target is higher at $26.21. Shares closed Friday at $14.91.

SanDisk

This is another top chip company that the UBS team feels will be a winner in the storage migration. SanDisk Corp. (NASDAQ: SNDK) is a supplier of quality, state-of-the-art solutions that are at the heart of many of the world’s largest data centers and embedded in advanced smartphones, tablets and PCs.

In the most recent quarterly report, SanDisk reported earnings per share and revenue that beat the Wall Street estimates. The beat did however come on the back of lowered expectations. While the road may remain a little rocky for the company, as some believe it lost business from Apple for the iPhone 6s, the UBS team is positive on the company’s overall strong product portfolio breadth. Plus, in what seems to be almost a yearly event, SanDisk is again the subject of takeover chatter, with a $75 offer being tossed around.

SanDisk investors are paid a 2.32% dividend. The UBS price target is $68, and the consensus target is slightly lower at $65.14. Shares closed trading on Friday at $50.86.

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The change in the storage world is coming, and the reality is that it’s coming fast. These three stocks are an outstanding way for aggressive growth investors to participate, and they currently offer excellent entry points at recent trading levels.

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