Is SanDisk Corporation (SNDK) a Pick?

Micron Technology, Inc. (NASDAQ:MU) will live on the edge of extinction if the memory market is soft. However, it  has seen improving market conditions in the sale of NAND and DRAM products.

Second quarter revenue for the last quarter was well ahead of Wall Street analysts expectations. The company reported a profit of $43 million, and got reaffirmation from analysts. Robertson Stephens upgraded the company to “strong buy” from “buy.” The company’s rising trend made hedge traders such as Steven Cohen of Sac Capital Advisors and the Arrowstreet Capital team of Peter Rathjens, Bruce Clarke, and John Campbell increase their stakes by 100%.

Micron Technology, Inc. (NASDAQ:MU) is a good investment going forward. It has been effective in creating a complete solutions portfolio in the memory sector. It allocates a significant proportion of its revenue on R&D and has positioned itself through its acquisitions. With the conclusion of the Elpida acquisition, Micron looks well-positioned to make money from its core business

Samsung needs a buoyant memory market so it can be a market transformer in the phone market, the enterprise sector, and the notebook market. SanDisk Corporation (NASDAQ:SNDK)’s good outlook for the market are positive signs for Samsung. It, however, missed modest expectations for its last quarterly earnings, deepening worries that its mobile operations may have peaked.

Samsung’s debt load puts it at an advantage to its peers. It carries a debt to equity ratio of 9.59, compared with 11.02 for SanDisk, 45.15 for Micron, and 44.92 for Sony. Three of these companies trade in a wide P/E range of 7x to 45x earnings, except Micron, which did not report any figure.

Samsung is also a good investment going forward. It has the best  multiples for growth prospects among the four companies. It has little debt, plenty of free cash, and pays a handsome dividend to investors

Valuation

From a valuation standpoint, SanDisk’s PEG ratio of 0.47 is respectable given the tough nature of memory market. The company’s return on equity for the past 12 months has been 9.99%, above 4.01% for Sony and -9.18% for Micron. It is however lower than Samsung (22.15%). At a forward P/E of 11.87, shares of San Disk are cheaper than Micron (13.92) and Sony (16.44). The stock is estimated to grow by 24.43% per annum in the next five years, above 15.90% for the industry and 16.93% for the sector. Wall Street currently holds an average price target of $70.00 on SanDisk, which represents close to a 12% upside from current levels.

Conclusion

To conclude, the simple idea I’m suggesting is that you could consider the stock for the future. As investors, we understand the importance of not leaving cash idly sitting around. If you’re struggling with ideas on where to put some of your investment cash in the near future, SanDisk is one company you can put on your watch list.

Adetokunbo Abiola has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Adetokunbo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Is SanDisk a Pick? originally appeared on Fool.com is written by Adetokunbo Abiola.

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