SNDK>.......One of the best kept secrets on Wall Street has to be
SanDisk Corporation, a leading provider of flash memory.
SanDisk produces flash memory which stores data for such
popular devices as Palm Pilots, wireless phones, and MP3
players. The advantages of flash memory are their small size,
their ease of removal, and their ability to retain data even
when its power source is turned off. More and more
companies are moving their products to the flash memory
system and SanDisk is definitely reaping the benefits of this
shift in production techniques. SanDisk holds the largest
market share in the industry for pure-play flash memory
makers and also boasts the industry's highest profit margin
assuring that these higher sales are translated into earnings at a
faster pace than the competition. Another major advantage
for SanDisk is that the company holds over 100 patents in
flash memory. Sandisk derives 12 to15 percent of its total
revenues from these royalties. These patents are also
important due to the barriers to entry they cause.
The year 2001 appears very bright for Sandisk with sales of
MP3 players, digital cameras, and PDAs at an all-time high.
Additionally, these products are ever evolving and have
caused SanDisk to ramp up its R&D effort to keep pace.
Despite this ramped up production and R&D, SanDisk has
been able to maintain its strong financial standing - a sign of
great management for the company. Earnings are slated to
grow at 21% in 2001 with expectations of 37% growth over
the next five years. This heavy expected growth is even more
remarkable when the stock's trading multiple is taken into
account. SanDisk trades with a 16.4 P/E ratio on EPS of
$3.68 and expected earnings of $1.24 in 2001, showing that
this future growth might not be priced into the stock fully at
this level. The stock has been beaten down lately due to
overall market conditions and the stock will certainly rebound
when the market begins to move higher. Once investors start
to feel more comfortable with the market environment,
SanDisk should more than reap the benefits. |
