SanDisk Corp. (SNDK)

[chmcnfunds]

Top Value Plays for 2012
Posted: Thursday, February 16, 2012 9:32 AM EDT

By: Michael Fowlkes

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Value Stock #3: SanDisk (SNDK)

SanDisk (SNDK) recently posted better than expected Q4 earnings, but the stock got killed after the company forecast first-quarter revenues below analyst estimates. The market was quick to react, and the stock fell 10%. It is possible that this sell-off was a bit extreme, and could be viewed as a good opportunity to jump into the stock at a discount. Revenue growth has been strong over the past eight quarters, and the company has delivered operating margins above 25% over the past 10 quarters. The industry is definitely moving in SanDisk’s favor, which is another reason we believe the current price marks a good value play on the stock. Technology continues to improve, and with the rapid growth of 3G and 4G devices such as smartphones and tablet computers, people are able to download more data, quicker. This leads to a need for additional storage, and will only help SanDisk. Yes, the recession has led to lower demand from some of SanDisk’s clients, but as the economy continues to recover that business will return. Sales growth is expected to be around 17% both this year and next. The company reported better-than-expected fourth-quarter numbers at the end of January, announcing earnings of $1.29, versus analyst estimates for $1.26. With the most recent earnings beat, the company has now outpaced analyst estimates for each of the last 12 quarters. The stock is currently trading with a P/E ratio of 11.5, and has a Price/Book ratio of 1.67. SanDisk does not pay a dividend.
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http://www.marketintelligencecenter.com/multiarticle.aspx?story=1334700&page=4

SNDK