Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com.

Would you give your life to Google ( GOOG)?

For millions of Internet users, this question is moot. The online search company already has become the repository for two gigabytes or more of their email, photographs, IM chats and blogs. Without really thinking about it, they have allowed Google to save many of their most intimate personal conversations and digital memories on a network-attached disk drive somewhere in its unregulated, little-scrutinized Web netherworld.

Now it turns out that two gigabytes might be just the tip of the iceberg, for technology circles are abuzz with rumors that the Silicon Valley goliath has plans to launch a service called Gdrive that would allow users to shelve every scrap of digital property they have, small or large, in a Google-owned data warehouse -- possibly for free.

Snapped 500 photos on vacation? Save them to Gdrive. Built a 9,000-song music collection? Save it to Gdrive. Emailed love letters, did math homework, typed out a grocery list and watched the Webcast of a ball game? Save it all to Gdrive. Want to show all this stuff 40 years from now to the grandkids from your hydrogen-powered wheelchair? Log on to Gdrive.

The concept of allowing Google -- or some other major Internet outfit -- to access your life is either really great or really scary, depending on how much you trust it to safeguard your secrets. To be sure, it would be convenient to have every picture and document available at the push of a search button from any computer in the world for the rest of your days and well beyond. But it would also be incredibly frightening to consider that all of your stuff is just a seven-letter password away from falling into the hands of any business rival, divorce lawyer, wayward child or identity thief.

D'oh, and Dough

I was watching an episode of "The Simpsons" with my son this weekend in which Homer finds his wife's memory chest in a closet and discovers that it holds unsettling secrets about their courtship. Hilarity ensues. But in real life, it might not be so funny if the stark reality of youthful views and indiscretions -- as opposed to hazy memories and hidden papers -- were readily available years from now.

No longer will you be able to conveniently lose a box of correspondence after ending a business or personal relationship. It will all be digitally sealed in an indestructible time capsule -- and possibly in duplicate or triplicate if the recipient of any of your mail or documents is also a Gdrive customer, or has forwarded them to other customers.

I'm going to let the ethicists puzzle out the implications of memories that never fade. I'll let the technologists decide whether virtual online storage might allow Google to usurp the role of the personal computer and its operating system as the center of gravity for modern men and women. And since nobody outside Google knows yet what Gdrive really is, I'll hold my fire on what it means for the trend.

My more immediate concern, as a financial columnist, is how you might make a buck off this. And it just so happens that I do have some ideas.

First, however, you need to know that technology stocks generally are in trouble this year. A couple of weeks ago, Intel ( INTC) announced downside guidance for its business, as it appears the vast personal computer complex is in suspended animation in advance of the release of the new Vista operating system from Microsoft ( MSFT).

Uncle Sam Wants Storage

Tech investors have been very slow to get over the PC as an investment and focus more intensively on the demand for data storage.

It's not just consumer and business email, multimedia and documents. There's practically a government mandate to make money in storage-technology companies, as there are regulatory requirements and corporate policies mandating long-term data preservation.

The research firm IDC says that, worldwide, companies shipped 831 petabytes worth of disk-storage systems in 2003, but are expected to ship 5,444 petabytes in 2008 -- a compound annual growth rate of 46%. (A petabyte is 1 million gigabytes of information.) IDC says that companies are spending an increasing part of their budget on storage hardware and software, with the gross global bill expected to rise to $75.3 billion in 2008 from $56.6 billion in 2003.

Not all of this stored data is of equal value, so a large industry has grown up to offer a variety of access, prioritization and protection at a range of price points. And that is where technology investors need to focus right now for growth and value.

A '90s Survivor

I've got two companies that appear rather attractive now: one a familiar large-cap, and the other a somewhat obscure but important, and cheap, small-cap.

The first is EMC ( EMC), which those of you who have been around for a while will recall as one of the three greatest success stories of the 1990s. It was much, much more than the Google or Apple of its time, rising a stunning 65,740% from January 1990 to January 2000.

Since then, EMC is off 73%, but the entire decline occurred in 2001 and 2002, and business has actually been great lately. After a period in which growth had slowed, its legendary sales team's focus on large- and medium-sized companies' need for fast, economical and reliable storage has pushed earnings up 22% again. If EMC brings in 75 cents a share in 2007, which is the conservative consensus estimate, its shares are going for a multiple of just 18, which is very low for a company with its track record, management and growth prospects.

One reason for the small multiple, according to an analysis at Sanford Bernstein, is that the company is carrying an unusually large amount of cash -- about $3 a share. Bernstein notes that if EMC was to merely announce a large stock buyback, investors would return and shares would get moving again to keep pace with flashier peers such as Network Appliance ( NTAP).

I believe the fundamentals are in place for EMC shares to earn up to 80 cents in 2007, and EMC deserves a multiple of 23. If that happens, the stock could break out of a four-year range and get back to $18 over the next 12 months, which suggests the potential for 28% appreciation.

A Small Storage Powerhouse

If that doesn't tickle your googlebone, then consider my small-cap choice: Xyratex ( XRTX). I'll forgive you if you've never heard of this company. It was spun off from IBM in the early 1990s, is based in England and went public on its own in 2004.

But in the past two years it has established itself as a well-run technology powerhouse in two key fields: network-storage subsystems for Fortune 1000 businesses, and storage-disk testing infrastructure for its industry peers. Network Appliance is its largest customer for its subsystems, while Seagate ( STX) and Western Digital ( WDC) are its biggest test-system customers.

Xyratex is already growing at better than 15% a year, but forward estimates have been steadily rising over the past year as Network Appliances' business has swelled and capital-expenditure budgets at Seagate and Western Digital are also on the march. The company has announced that 60% of its entire 2006 revenue guidance of $278 million to $292 million has already been booked, and analyst checks suggest that its factories are running at full capacity.

The disk-drive business is changing and growing quickly in response to demand not just from online and PC demands, but also from television recording systems such as TiVo and portable media players such as iPods that require terrific, high-density 1-inch and 2.5-inch drives. The industry is also transitioning into new technology such as "perpendicular" recording, which has put a lot of demand on high-end testing.

Revenue at Xyratex has risen at 40% annually over the past five years, but even if that slows down by a third, the company appears capable of exceeding its relatively conservative earnings guidance. For some reason I cannot really fathom, the stock is trading at a price-to-earnings multiple of 11.5 on consensus 2007 estimates of $2.10 a share, well below the industry average in the mid-$20s. Moreover, it's price-to-sales multiple is 0.96, which is less than half the industry average.

If Xyratex can remain on track to earn as much as $1.90 in 2006 and $2.20 in 2007, which I believe are conservative estimates, and comes to deserve an 18 multiple, which is still ridiculously low, then the shares, now at $23, could hit $39 in 18 months -- a 70% move. Store that forecast in your future Gdrive account, and let me know how it turns out.
At the time of publication, Markman had no positions in stocks mentioned, although positions may change at any time.

Jon D. Markman is editor of the independent investment newsletter The Daily Advantage. While Markman cannot provide personalized investment advice or recommendations, he appreciates your feedback; click here to send him an email. (Default or No Position) Jon D. Markman is editor of the independent investment newsletter The Daily Advantage. While Markman cannot provide personalized investment advice or recommendations, he appreciates your feedback; click here to send him an email.