Earnings season is here and Sandisk (NASDAQ:SNDK), the premiere company in NAND flash memory, comes out with earnings on April 17. I think they will beat estimates and here is why — the boom in smart phones and tablets, devices that use NAND flash memory.
- Research firm IDC recently reported that sales of tablets grew more than 78% in 2012 to more than 125 million units. Their forecast for 2013 is growth of almost 50%.
- IDC also predicts the smart phone market will grow more than 27% in 2013.
With this shift, I see a big winner in Sandisk. With SNDK you need not pick a winner among device makers. Instead, you are investing in the rapid growth of the sector, something I call “personal tech.” Sandisk owns patents — and receives licensing fees — on various aspects of NAND flash memory production and the company sells a great deal of NAND chips itself.
- The research firm IC Insights sees $31 billion in NAND sales in 2013, based on shipments of 8.8 billion units, with prices declining 7%. If that seems troubling, it is actually great news — NAND price decreases can top 20% a year and capacity is tightening.
- Research firm iSuppli sees NAND demand increasing in 2013 due to smart phones, tablets and the growing emergence of computers with solid state drives (SSDs) — memory equivalent to hard drives — which are now available from all major computer makers.
Consensus estimates for SNDK earnings are $0.77 for the first quarter and $0.83 for the second quarter. I think the whisper number is about 10% higher — around $0.85 — and I believe they could report earnings high enough to match that whisper. This could move the stock, which has been on a tear, further north.
Michael Shulman is editor of Options Income Blue Print. How would you like to add $5,000, $10,000 even $25,000 a year or more to your income – combined with capital gains that are as much as twice the market? Discover these little known “Money Engines” that churn out cash, month after month.