Will SanDisk Hit $30?

SanDisk Corp. (SNDK) was on its way to reclaiming $30 yesterday morning, when the chip stock was up by $1.51, or 5.52%, to $28.85 on heavier than average volume. Yesterday morning’s ThinkEquity note was yet another reiteration of the investment thesis for owning SanDisk; higher future prices for flash memory. The Associate Press noted comments by ThinkEquity analyst Vijay Rakesh who said that recent, and one might add somewhat unexpected, weakness will be short lived as Apple (AAPL) resumes production of the iPhone.

Although it seems like months away, he wrote:

SanDisk back to back-to-school promotions at the electronic outlets Best Buy (BBY) and Circuit City (CC) start this week, which should clear out some of its inventory, positioning SanDisk for a much stronger third-quarter.

Having priced in to some extent that the worst is over when it comes to lower NAND pricing and eroding margins, there has been a lot of skepticism evidenced by the short interest rising to a nine month high - 21.05 million shares as of the latest reporting date of May 15.

However, because the earnings multiple is still relatively cheap, and duly remembering that SanDisk trades in tandem with the price of flash memory, as long as there is confidence in NAND pricing trending higher, this rally still has legs.

Related Articles:

• May 21, 2008:  SanDisk Sell-Off Doesn’t Defeat Second Half Turnaround
• May 13, 2008:  SanDisk Analyst Anticipates Strong Second Half
• May 5, 2008: SanDisk Shares Forward-Looking, Shorts Still Skeptical
• April 18, 2008: SanDisk CEO Affirms Market Optimism of NAND Turnaround
• April 4, 2008: SanDisk Rally All About Potential NAND Pricing Bottom