Flash in the pan, or Flash of brilliance?
"SanDisk Corporation designs, manufactures, and markets flash memory storage products
that are used in a wide variety of electronic systems. The Company has designed its flash
memory storage solutions to address the storage requirements of emerging applications in
the consumer electronics and industrial/communications markets. The Company's products
are used in a number of rapidly growing consumer electronics applications, such as digital
cameras, personal digital assistants, portable digital music players, digital video recorders
and smart phones, as well as in industrial and communications applications, such as
communications routers and switches and wireless communications base stations. We are
very bullish on SNDK after the tremendous quarter it had. With revenues up 174% and
earnings up a whopping 230% it's hard to argue with SNDK's success or ask for anything
more. We believe there is still tremendous value to realized in the company future as it goes
forward. SNDK is sporting a five year earnings growth rate of 40%, but is trading at a P/E of
19 times trailing. Of course, we believe that stocks of SNDK'S potential should trade at least
at its growth rate. This would leave SNDK at half its fair value, and without any premium.
Believe it or not, even with the tremendous earnings announcement SNDK is down nearly 6%
for the month. Combine this value with no debt whatsoever, tremendous growth, and growth
potential, and you have a solid stock to add to your core portfolio. We believe SNDK is
grossly undervalued and we conservatively expect its price to rise to at least $102 in the next
year." |
