Editor's Note: Bill Patalon's readers enjoy inside access to his regular consultations with Money Map Press editors. We're sharing this conversation with you today because the subject happens to lie at the intersection of several high-profit trends now. Here's Bill…
Last Wednesday, the Milpitas, Calif.-based SanDisk Corporation (Nasdaq: SNDK) reported first-quarter results that smashed analyst expectations, and the company's shares shot up 6% in after-hours trading.
But our Chief Investment Strategist Keith Fitz-Gerald saw that beat coming and put readers out in front of it.
He talked to me about its recent stellar performance…
American Resilience Is the Fuel
"One of the arguments that I've advanced in recent weeks is that American companies are far more resilient than Wall Street would have us believe – which is why I watched the sell-off with a feeling of opportunism, and not apprehension," Keith told me. "In the specific report you referenced, BP, I agreed with your assessment that we're moving into a 'stock-picker's market,' and listed three companies that I believed investors should be taking a look at. SanDisk's great first-quarter numbers affirm that assessment."
Keith also recommended ABB Ltd (NYSE: ABB) and Abbott Laboratories Inc. (NYSE: ABT). ABB and Abbott are both earlier Private Briefing recommendations. SanDisk was a brand-new recommendation, but one I like a lot; Keith and resident tech guru Michael Robinson also each like the stock.
One reason it's kind of a cool investment play is that you probably use its products. At minimum, I'm betting you have at least one of its USB Flash Drives. You might also have a SanDisk Micro SD card (the kind you use in a digital camera). And I also have several SanDisk MP3 players; I download "audiobooks" from Audible.com to keep me company during my hour-long commute (one-way) each day.
When you take all of this together, 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," Keith says.
The company's first-quarter results bear that out.
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.
"We delivered record first quarter results, driven by 61% growth in our SSD (solid-state-drive) revenue and strong retail performance," said Sanjay Mehrotra, SanDisk's president and CEO. "We are excited by the momentum we are building in our business as we continue to execute on our growth initiatives."
A Solid (State) Growth Strategy
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 has recently introduced innovative products in three categories:
A line of "CloudSpeed" enterprise SSDs for data-center and Cloud-Computing storage solutions.
A line of high-performance "iNAND Extreme" embedded flash drives for Android-based smartphones.
And a 128-gigabyte SanDisk Ultra microSDXC" UHS-1 card, which the company says is the world's highest-capacity mobile storage offering.
These are all sound strategic moves, says a recent report from stock-researcher Trefis.com.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.