My two cents:
I initially bought SNDK at 28, averaged down at 23 and last week doubled my position at 13. Smart investors buy low and sell high. If you find a company that has long term prospects and good fundamentals, it is never a mistake to buy into that company, unless you are unwilling to stick with it.
Let's examine SNDK's prospects for a moment:
In the short term, I expect to see a quite pleasant surge of sales of CF due to the new Windows CE palm PCs. I purchased one myself last week (A Philips Nino -- and I generally don't like handheld computers). I then went on to buy a 48MB SanDisk CF memory module, and I love it. (Interesting side note- the company I bought it from had them on hand and ready to sell, I received it in 2 days). I am carrying around a <1 lbs 75 MHZ RISC processor with 8MB EDO Ram and a 48MB solid state hard-drive from SanDisk (call it a small Newton on steroids). This is wicked tech and really fun to use -- altogether, it cost me around $750. I am very bullish that I am not the only one that will find these devices attractive. THIS IS AN EMERGING MARKET THAT SANDISK IS IN THE PRIVELEDGED POSITION TO DOMINATE.
In the long term, solid state hard drives will overtake magnetic media. Of this, there is little doubt. The ultimate cost of production of solid-state hard drives can be brought down to a fraction of the cost of platter-based magnetic media (no moving parts, one slab of silicon, etc..) The reliability of solid-state is so much better than spinning platters of magnetic media that it is hardly worthy of discussion, except: The market for high-reliability storage (i.e. Any organization that utilizes mission critical systems -- read "ALL BIG COMPANIES, GOVT, MILITARY") is willing to pay a premium and therefore the initial ramp-up costs for producing extremely high density solid-state storage are covered.
So, if you believe what I have just told you, and you believe that SanDisk is working towards extremely high-density solid-state storage, and you believe that SanDisk is and will continue to be the/a dominate player in this market segment, then all we are faced with is the examination of SanDisk's fundamentals and an evaluation of their ability to maintain their dominance of the market segment.
Fundamentals?
P/E = 15.66 (VERY ATTRACTIVE)
P/Sales = 2.17 (SOLID)
P/Book = 1.71 (VERY NICE)
Avg Margin = 16%
Even though we had a earnings (profit) decrease this quarter over the same quarter last year, we have a revenue increase of 17% (READ: MARKET IS GROWING). Even if margins decrease, economy of scale can work wonders for SanDisk's bottom line.
One other factor:
INSIDERS ARE NOT SELLING. SOME ARE EVEN BUYING.
For any of you that are dismayed at SanDisk's recent plunge in the market and are thinking of selling your shares: SELL THEM TO ME As far as I can tell, these prices are like pennies from heaven - it's Christmas.
BUY-LOW (NOW), SELL-HIGH (LATER).
My two cents worth...
Dan |
