Should I Buy SanDisk Stock?

SanDisk stock

SanDisk stock is having some real troubles this year - which is a big change from where it's been...

SanDisk Corp. (Nasdaq: SNDK) stock tallied 250% gains from June 2012 to July 2014 with little interruptions.

But since then, SanDisk stock has been highly volatile.

SanDisk stockIt began in July 2014 when SanDisk - the leading supplier of so-called "flash" memory products - reported its output capability would probably keep it from meeting demand in the quarter to follow.

The company lowered its earnings guidance. SanDisk stock got slammed. It fell as much as 15% going into August. Since then it's been moving up and down violently, as the SanDisk stock price chart to the right shows.

It's now down about 32% on the year. SNDK's most devastating day was on Jan. 12, when SanDisk stock fell 14% after it missed guidance on sales.

It recovered a bit over the next couple months until yet another announcement of missed revenue guidance hammered the stock another 19% on March 26. In the week to follow, SNDK bottomed out at $63.34, a drop of 35% in 2015.

Now, SanDisk stock has begun to inch back up, but hardly enough to reclaim anywhere near its 2014 highs.

So, what are investors to make of the SanDisk stock price today?

Should I Buy SanDisk Stock?

It's important to note that despite falling out of Wall Street's favor, SanDisk is still a solid company.

"This is a great company whose products are used in nearly every smartphone sold in the world today," Money Morning Defense and Tech Specialist Michael Robinson said. "I do still believe in SanDisk and the role it plays in the global tech ecosystem."

But this volatility has been a real problem when it comes to actually buying SanDisk stock right now.

"As much as I may like an individual stock, I always remind myself that in the long-run it really pays to remain a focused and disciplined investor," Robinson said.

That's why, right now, SNDK is not the best tech stock to buy.

But you should keep a close eye on it for a possible re-entry.

Why SanDisk Stock Should Be on Every Investor's Radar

SanDisk is the No. 1 supplier of flash memory in the global supply chain. While part of its descent has been hastened by Samsung Electronics Co. Ltd.'s (OTCMKTS ADR: SSNLF) weakening smartphone sales, SanDisk's products are not only found in smartphones, but also laptops and all sorts of other consumer and corporate electronics.

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And even so, weakening sales for one smartphone manufacturer doesn't change the growing future demand of SanDisk's products.

"It may be hard to remember, but seven years ago our phones - even our cell phones - were mostly phones. Now, however, our smartphones are our primary computing devices. We use them to stream music and movies, take photos and video, play games, etc." Robinson said. "That means people need more and more memory on their mobile devices. And they're getting those hundreds of gigabytes of memory - across both iPhones and Android mobile devices - from SanDisk."

Flash memory is too important a technology to count SanDisk stock out right now.

"Unlike PCs, smartphones and tablets simply have no space for traditional spinning hard drives," Robinson said. "These units can be made extremely small, the size of a postage stamp. Since they are solid state, there are no moving parts to go haywire should you drop the device."

And SanDisk hasn't only cornered the flash memory market; it's a player in the ever-important cloud market. Over the last month cloud has really been piquing investor interest with tech giants like Amazon.com Inc. (Nasdaq: AMZN) and Microsoft Corp. (Nasdaq: MSFT) more explicitly reporting their cloud revenue numbers for the first time.

SanDisk will further continue to get a head-start on the biggest and most important tech innovations with its venture capital arm, SanDisk Ventures. SanDisk's top brass knows "that young and hungry companies are bursting with great ideas for new product innovations."

The Bottom Line: There are several reasons to believe that in the near future, SanDisk stock will be a buy. It simply has too valuable a hold on the all-too-important flash memory market to think it's going to cede its role in the tech industry. And it's certainly getting in front of the trends with its venture capital efforts. But right now, SanDisk is getting hammered, however unnecessarily, by Wall Street as it continues to miss guidance. Until SanDisk can shake out the last few bears, you may want to sit on the sidelines until the stock offers up another good entry point.

Jim Bach is an Associate Editor at Money Morning. You can follow him on Twitter @JimBach22.

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