SanDisk: Flash!

04/30/2014 7:00 am EST


You probably use one of this company’s products; at minimum, I'm betting you have at least one of its USB flash drives, SD cards (the kind you use in a digital camera), or MP3 players, suggests William Pantalon in Money Morning.

SanDisk (SNDK) reported first-quarter results that smashed analyst expectations; revenue totaled $1.51 billion, an increase of 13% on a year-over-year basis; it was $20 million more than analysts were expecting.

Profits came in at $1.44 a share—a 71% gain from the same period a year ago and a full 19 cents better than the Wall Street crowd was expecting.

Our Chief Investment Strategist Keith Fitz-Gerald saw that beat coming, and now adds, “SanDisk is a great place to start if you're just joining in or have a little extra cash you'd like to put to work at the moment.”

SanDisk is hitting its own growth targets by tapping into some of the hottest growth trends—including data centers, the Mobile Wave, and Cloud Computing.

Indeed, the company recently introduced innovative products in three categories: a line of SSDs for cloud-computing storage, high-performance flash drives for Android-based smartphones, and a 128-gigabyte card, which the company says is the world's highest-capacity mobile storage offering.

Late last year, SanDisk upgraded its "Flashsoft" software because it wanted to target the accelerating demand for software-defined storage.

SanDisk aims to capture the attention of IT departments that are contemplating the switch to flash arrays. Trefis analysts say this represents a new market for SanDisk, meaning lots of long-term growth should come from software-defined storage.

Wall Street currently has a one-year target price of $81.93 on SanDisk shares—which is about 8% above Keith's recommendation price of $75.69. Of course, we see much bigger gains ahead in the long-term.

And after the great "earnings beat," look next for investment-banking analysts to start upgrading SanDisk and boosting their target prices for the stock. That will serve as a nice catalyst in the near term—and will jump-start the long-term appreciation we see for this stock.

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