Art, I have felt Sandisk was undervalued since the day I first purchased it in 1998. ;-)
Like you, I feel it is undervalued at this price level, but not too much. GS will probably take it down fairly hard at some point and if they do, I will reload in a huge way (say, in the low to mid $60's?). If they execute in a big way in the SSD market, I could see this stock in the $80's this year barring a downturn in the market.
For the next 2-3 years, I believe we are going to be in a bit of a funk with valuation as a result of limited increases in NAND production and continuously dropping prices for the products NAND is used in. In the past, all of the NAND players had to keep upping their production more than prices were dropping in order to increase the top line. I don't think anyone is going to be able to do that so much with geometries already at 1x and on the eave of 3D production, as we have discussed here many times. Of course, this could mean NAND comes into a short supply/higher pricing scenario that results in more gross profit. That's what I am hoping. Top line revenue growth to be modest, but gross profits increase significantly.
Although I am out completely, it isn't because I have any doubts about the SNDK story. It's because I know there will be a buying opp here fairly soon.
UWG |
