A shell-shocked economy, spiraling debt at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet, while panic never helps investors, it's still a good idea to play devil's advocate with investments.
In Motley Fool CAPS, more than 135,000 members have weighed in on 5,300 stocks, sharing bullish and bearish opinions alike.
Consider portable media device maker SanDisk (Nasdaq: SNDK ) . The tech sector is showing definitive signs of life, but in Motley Fool CAPS, a significant number of the 1,721 members weighing in on the company offer reasons to be bearish. I've already plucked out some of the common bullish rationale backing SanDisk today, so here are three counterpoints, courtesy of CAPS
1. Pricing pressure: SanDisk competes on the music player front with Apple (Nasdaq: AAPL ) and Microsoft (Nasdaq: MSFT ) , and supplies top handset makers like Research In Motion (Nasdaq: RIMM ) and Nokia (NYSE: NOK ) with memory cards. Despite returning to profitability in the second quarter, the company forecast revenue below Wall Street estimates and said that new supply could pressure industry pricing, which has hurt the sector in recent quarters.
2. Green shoots?: Although companies like Intel (Nasdaq: INTC ) and Seagate Technology (Nasdaq: STX ) signaled recent strength in tech, a full recovery is yet to be seen. SanDisk sees strength in European and Asian markets, while the U.S. limps on. The market has been slower to adopt its solid-state-drive business, and total revenue in the latest quarter fell 10% from the year-ago period, even though the company moved earnings into positive territory. So not all investors are convinced that up is the only way to go from here.
3. Bygone bargain: The overall market has made big gains in recent months, and tech stocks have shot higher, further catalyzed by Intel's positive earnings. Shares in SanDisk have more than tripled from their seven-year low in November. The recent rally has the stock priced at a forward multiple of more than 80, with a five-year growth estimate in the ballpark of 13%.
Of course, SanDisk has survived and thrived in the past, but whether the company will continue to deliver big returns is why CAPS is such a great resource to augment your own analysis.
To see what the very best members are saying now about SanDisk, just click on over to Motley Fool CAPS and have a look. Your opinion is more than welcome.
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