Is SanDisk Corporation (SNDK) a Pick?

SanDisk Corporation (NASDAQ:SNDK), a leader flash storage solutions, showed strong growth in its second quarter report, posting revenue that was up almost 43% on a year-over-year basis. The company’s sales were driven by the prices of chips that remained high as producers limited output increases. SanDisk Corporation (NASDAQ:SNDK)’s stock rose as much as 7.3% on the news, but our focus should also be on how to trade the other memory-related companies based on SanDisk Corporation (NASDAQ:SNDK)’s revised outlook.

SanDisk Corporation (NASDAQ:SNDK) beat Wall Street’s revenue estimates by almost 2% to 6%. The company now expects enough demand to keep prices healthy this year. It may report sales of $5.95 billion to $6.05 billion, up from a first-quarter forecast of $5.6 billion to $5.75 billion. It trades around 5.2 times estimated 2014 earnings. It cut spending on factories as the memory-chip industry scaled back supply to halt the fall in prices.

Due to the positive sentiment expressed by the company, Needham reaffirmed its buy rating on a price target of $80.00, compared to the stock’s current price of $62.18. The overall sentiment from the hedge fund sector is also positive, with Steve Shapiro, Richard Patton, and Michael Messner appearing quite bullish, each upping stakes by 100%.

SanDisk can be considered as one of the barometers to gauge broader economic trend. The company’s ties to the memory sector make it one of the organizations that we look toward when judging how global growth will unfold. Its condition will reflect on the other memory-related companies such as Sony Corporation (ADR) (NYSE:SNE), Micron Technology, Inc. (NASDAQ:MU), and Samsung.

Peers

Sony Corporation (ADR) (NYSE:SNE) needs a profitable memory market so its Memory Stick solution can reign supreme in the removable memory market. The company designs and sells electronic equipment, instruments, and devices for consumer and industrial markets worldwide.

The company posted a third quarter loss of $124 million for the fiscal year ending March 31. It cited falling sales of video game hardware for the declining figure. The company has however forecast an expected net income of $213 million for the fiscal 2013.

Much like the second quarter fund interest for SanDisk Corporation (NASDAQ:SNDK), Sony Corporation (ADR) (NYSE:SNE) has votes of confidence, namely from Charles Davidson and Jim Simons, both increasing their stakes by 100%. However, due to its falling profits, I will wait for its next quarter report before making a pronouncement on Sony.