Technology’s growing memory needs have been a key to SanDisk’s growth
These are sweet times for computer memory makers – the ones that survived the terror of 2007 and 2008, that is.
Flash memory specialist SanDisk (Nasdaq: SNDK), for example, recently reported first-quarter sales up by 65 percent, to $1.1 billion, with earnings up sharply, too.
Hot demand for consumer electronics helped power SanDisk’s brilliant results. The company also provides storage for cell-phone and smart-phone products, and it hopes to capitalize on the incoming surge of tablet computers imitating the iPad, as flash-based storage is the only sensible option in that kind of product for numerous technical and aesthetic reasons.
“With our leading technology, large-scale manufacturing, diversified end markets, broad product portfolio, premium brand, and a strong balance sheet, we have powerful momentum to capitalize on future opportunities,” said CEO Eli Harari.
Given the technology’s numerous advantages – low power, no moving parts, lots of storage in a small physical space, ultrafast data reads and more – it’s not hard to see flash memory chips moving into many new markets. The rise of smart phones that store lots of media and feature upgradable flash storage has been an absolute boon for SanDisk.
SanDisk recently sported a price-to-earnings ratio of 13, making it a stock well worth considering.
Ask the Fool
Q: Some of your recommended stocks have lost a lot of their value over the past few years. Why haven’t you sold? – S.A., online
A: It’s true that if you look at the list of recommendations from our “Motley Fool Stock Advisor” newsletter, you’ll see some stocks in the red by 50 percent or more, along with some that are up more than 1,000 percent (and many in between). Portfolio components can vary widely in performance, which is why diversification is so important. A few big winners can more than make up for losers.
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My dumbest investment
My dumbest investment was buying shares of a newly public underwater construction and diving services company. The stock’s initial public offering was around $15 per share, and within about a year it filed for bankruptcy protection. Good thing I did not follow my broker’s advice and make a “real-estate-sized” investment (meaning a lot more money than the token investment I made). – C.H., online
The Fool Responds: Be careful with IPOs. They can be exciting, but they also often don’t perform so well once their hype dies down. Many end up trading for less than their offering price, and some, like yours, can even run into big trouble quickly. It can be smart to hang back and watch such companies for a year or more to see how they do.
It’s critical to research a company well before buying into it, and that can be hard to do with IPOs, as they generally don’t have years of financial statements for you to examine. Some are tied to shaky companies, too, and their shares can be quite volatile. Consider focusing on great, established companies instead.