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NetApp Has Gone As Far As It Can Go

Consider, even with NetApp's year-to-date stock delicate of 13%, this now places the company's shares on even valuation metrics with EMC. Both trade at P/Es of 20. So why not go with the company with the largest share and bringing in higher earnings? Unfortunately, that's the predicament in which NetApp finds itself.

Absent clear differentiation between its products and those from EMC, it makes little sense to buy the stock at this point. Complicating matters is the fact that the market for storage is no longer as attractive as it use to be.

To that end, I see NetApp as a prime acquisition target for a company like IBM (IBM) or Hewlett-Packard (HPQ), which for some time have underperformed in that area, particularly at the hands of NetApp.

Given NetApp's strength in Fabric-Attached Storage and its E-series line of products, the company's excellent strategy and design will continue to appeal to the enterprise. I just don't believe the Street will reward NetApp with a higher share price any time soon.

So if given a choice to buy NetApp or the market leader EMC, it's not a hard decision.

At the time of publication, the author held no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

>>Read more: Netflix Has an Enormous Opportunity Sitting in Front of It

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