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SanDisk Flashes Unusually Strong Buy Signal

Look for a break above its multi-year highs and beyond


SanDisk (NASDAQ:SNDK) — This manufacturer of flash-memory storage products appears undervalued. Analysts believe that the demand for its products will increase rapidly due to the growing use of solid-state drives, ultrabooks, tablets and smartphones.

On March 26, the Trade of the Day said: “Greater dependence on ‘the cloud’ also creates more demand for flash-memory chips. S&P raised their 2013 operating earnings per share (EPS) estimate $0.28 to $4, and $0.13 to $4.70 for 2014. It estimates $5 for 2015.”

Since then, S&P has raised their 2013 estimate to $4.09 and 2015 to $5.32.

SNDK has been trading in a bull channel since November with support at approximately its 50-day moving average. In late April, it briefly violated that line, but our internal indicator, the Collins-Bollinger Reversal (CBR), flashed double reversals, and the stock quickly responded with rallies that settled above the line.

On Thursday, SNDK flashed an unusually strong CBR buy. Also note the new MACD buy signal generated on Tuesday.

Buy SNDK at the market and look for a break above its multi-year high at $58.92 and a run to $65. Long-term buyers may be rewarded with much higher returns.

SNDK Chart
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Trade of the Day Chart Key

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