It’s a company that targets some of the hottest sectors in technology.
And its growth potential is immense.
But the company isn’t a household name.
So you can fly under the radar – but still have a pretty good shot at doubling your money on this well-run, high-tech leader.
Let me tell you all about it – and demonstrate how my five rules for generating wealth from tech stocks helped me find it.
A Key to Success
If you want to make money in tech stocks – or any stocks, for that matter – find a company that makes products its customers can’t do without.
That’s certainly the case with the Silicon Valley leader I’m going to tell you about today. This storied firm makes products that much of the global tech industry simply cannot do without.
In fact, if you use a smartphone, a tablet computer or access a cloud-based application, the odds are good you have contributed in some way to this company’s huge revenue stream.
The company that I’m talking about is SanDisk Corp. (NasdaqGS: SNDK), a Milpitas, Calif.-based company that’s best-known for its core competencies in memory-storage devices.
One of the things you have to immediately like about SanDisk is the fact that it’s targeting two of the hottest sectors in tech: Cloud Computing and the Mobile Wave.
Either trend alone would be enough to really drive the stock’s price. But put them together and you end up with pure magic – and the opportunity to double your money with a relatively modest level of risk.
Maintaining that risk-reward balance is the chief objective of my Five Tech-Wealth Investing rules.
And as we’ll see in a moment, SanDisk meets every one of them.
Two Big Catalysts
Let’s start by looking at how this company is raking in the cash by riding the Mobile Wave.
As you’ve heard me note in the past, mobile devices are outselling PCs by a factor of 5-to1. In less than five years, Google Inc. (NasdaqGS: GOOG) alone has activated some 900 million devices that use its Android operating system. The tech giant says it is turning on some 1.5 million devices a day.
Meantime, Apple Inc. (NasdaqGS: AAPL) may lag Google in unit sales but it’s still a major mobile force. It boasts 42% of all U.S. smartphone sales, and in this year’s first quarter accounted for 39% share of tablet sales.
Despite their different operating systems, all those tablets and smartphones have one key factor in common. They rely on solid-state devices known as “flash memory.”
Flash memory is critical for the success of mobile devices for a very simple reason: It truly puts the “mobile” in mobile technology.
Here’s why. Mobile devices – which are likely to be banged about, bumped and dropped – simply won’t be able to keep operating with the same kind of spinning hard drive you find inside most laptops or desktop PCs.
And it’s not just the durability factor that is so important.
Size also matters.
Flash-memory technology is much more compact than its afore-mentioned counterpart. And that means mobile devices can be made incredibly small and still operate as the perfect storage system for music, photos videos and more.
Thus, mobile sales are one of two big reasons why SanDisk is shipping roughly two million memory devices a day. The other: Virtually every major maker of handsets and tablets uses its products, SanDisk says.
If that’s all SanDisk had to offer, it would still be a winning investment. But it also plays a vital role in Cloud Computing, data and applications run from hosted remote data centers rather than on proprietary corporate computer networks.
SanDisk makes solid-state drives (SSDs) that are replacing disc drives in data centers all over the world. SSDs offer two major advantages over conventional spinning hard drives: They run faster … and they consumer a lot less power.
A standard hard drive can handle about 180 data reads and writes per second. But SSDs run roughly 220 times faster – each second conducting some 40,000 read-writes.
With SanDisk’s help, data centers are slashing their energy use. Hard drives consume about 15 watts of power; but SSDs use just 1 watt. Industry analysts say this stat alone explains why most of the major cloud computing firms are making the switch to SSDs.
And SanDisk is capitalizing on that transition. Sales of SSDs have recently doubled to 20% of overall sales.
Hitting on All Cylinders
With a market cap of roughly $13.8 billion, SNDK trades at less than 11 times forward earnings, a discount from the average of nearly 15 for the Standard & Poor’s 500 Index.
And my analysis shows that SanDisk is angling to double its share price from its current level at $57.
Let me show you why by running it through the “five filters” that comprise my tech-investing strategy. They are:
Given that SanDisk meets all five of my demanding criteria for stock selection, it’s a very solid profit play – so solid, in fact, that I would rate it as a “foundational play” that can help form the basis of a very good investment portfolio. All that, despite the fact that it will be much less volatile than some of its small-cap brethren.
This is the kind of stock you want to hold for the long haul. I’ve found over many years of tech investing that a well-performing portfolio must have a solid foundation. And it all starts with base of great companies like SanDisk.
[Editor’s Note: Speaking of building a well-performing portfolio…
Many of you have been asking for specific strategies for playing my top tech recommendations. Well, I wanted to let you know I’m putting together something really special. Something that will provide you with step-by-step guidance on individual plays. I can’t wait to share it with you. I’ll give you more details as we get closer to the release date.
As always, I welcome your comments, questions and suggestions. Post a comment below … I look forward to hearing from you.]