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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: OrionX who wrote (3276)	6/18/1998 1:04:00 AM
From: James Choi	Read Replies (1) \| Respond to of 60323

Five times the usual volume! Shorts are covering and longs are buying. Some may take profit tomorrow. But then, maybe not. The dark cloud that was Asia is having its day today again. Both Nikkei and Korean market are significantly up tonight. And there are several other factors that will drive SanDisk to a higher price. 1. Valuation. The price should be at least in the 20s. Even 30s is not expensive considering the earning potential. 2. Summer rally. It is likely to happen again especially now that the US is showing some interest in helping Japan to get back on track. 3. Sector rotation. Small cap has been out of favor for some time and has been beaten to the pulp last few weeks. The money had rotated out of it and it is time to rotate back in. 4. Earning surprise potential. The digital cameras have been improving both in quality and quantity. If you look at the camera catalog, there are more cameras every time I get a new catalog. The performance is getting better which means it will require more memory storage. I think there will be a upward surprise this time. 5. MMC. Everyone forgot about it. MMC is going to be even bigger than CompactFlash considering there will be many more cellular phones than digital cameras for some time. Unlike CF where SanDisk holds over 70% of the market share, SanDisk has 100% market share in MMC. 6. CompactFlash as industry standard. It is true that competitions are popping up. But most of them are paying royalty. Even if some of them don't, it helps to make CF the industry standard. Apple had no competition while IBM was plagued with competition (clones) in the early days of PCs. Yet, IBM still benefited from the clones because it helped to make PC standard. IBM had a slice of a huge pie while Apple had the entire small pie. 7. Public recognition. Many still have never seen a CF even in this forum. I use one everyday and I am buying one more. In next few months, more and more people will experience this magic first hand. If any of those read Peter Lynch's books, they will say "I like this product. I think I will do some research to see its potential." We need not go over the result of their search. Some of those Peter Lynch style investors will be fund managers as well. As more people use it, more people will recognize its investment potential. 8. Merry Christmas. This is time to start preparing for the end of the year. As someone pointed out, last year's rally started about this time. I was not around, but I would think that the reason behind that rise was expectation of Christmas sales in digital cameras. That expectation was one year early. Anyone can see that digital cameras will be favorite item to be found under the tree this year. I have seen figures that cite the digital camera sales this year is triple of last year, or something of that effect. Momentum is likely to build up and the price should climb up. 9. Earning projection. The projections I have seen draw a straight line with a mild slope over next year or so. That kind of growth is more suitable for more mature industry that suffers from saturation. Digital camera is only starting, far far far from saturation. As all of you read, CF sold more than all other storage medium for digital camera COMBINED, and about 70% of it was SanDisk. I would expect to see some parabolic rise in growth before it becomes a straight line. Over all, I think it was totally irrational for SanDisk stock price to drop to $15. Last time it happened, I trembled in fear and nervousness. This time, I knew better. I loaded up. Every time it fell more, I loaded up more even resorting to borrowed money. Today's rise will allow me to return the borrowed money at 18% profit. Not bad for a week's work. If this stock falls again to 15, you bet I will load up again. Happy returns for all of you. James