Even when stocks are on strong runs, it can still be a good time to add to positions if their prospects are bright and valuations remain attractive. Let's look at two growth stocks trading at reasonable valuations to double up on.
Sandisk
Despite its price more than doubling this year, shares of Sandisk (SNDK 5.38%) are still cheap, trading at a forward price-to-earnings (P/E) ratio of 15 times analyst estimates for fiscal 2026 (ending June 2026) and below 8 times fiscal 2027 estimates. Meanwhile, the company is in the midst of a flash (NAND) memory supercycle that shows no signs of letting up.
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Just a few years ago, the NAND market was in shambles, with memory companies having too much supply after a surge in demand for electronics during the COVID-19 pandemic led them to increase production. When that pull forward in demand disappeared, the market became oversupplied, and memory makers had to sell inventory below the cost of making flash memory. This led the big memory makers to significantly slash production and turn their focus to DRAM (dynamic random access memory).
NASDAQ: SNDK
Key Data Points
Meanwhile, a special form of DRAM called high-bandwidth memory (HBM) with strong unit economics emerged for use in artificial intelligence (AI) data centers, leading NAND to be an afterthought.
However, AI data centers soon needed massive, high-performance solid-state drives (SSDs) that use flash memory to store data, leading to a surge in demand for NAND shortly after production lines were cut and the focus turned to HBM. This has led to surging NAND prices, which are now propelling Sandisk's sales and gross margins. And with other memory makers now focused on HBM and unlikely to shift production back to NAND, as a pure-play flash memory maker, Sandisk should enjoy many years of strong revenue growth and high margins, giving the stock plenty of upside from here.
Taiwan Semiconductor Manufacturing
While Taiwan Semiconductor Manufacturing (TSM 4.36%) is trading near all-time highs, the stock is still attractively valued, with a forward P/E of around 26 times. That's a great value for a company at the heart of the AI infrastructure boom that is growing quickly.
NYSE: TSM
Key Data Points
TSMC is the world's largest foundry, and as the only chip manufacturer that has proven it can make advanced logic chips at scale, like graphics processing units (GPUs), with few defects, it has become an integral partner to chip designers. The company has a near monopoly on advanced chip manufacturing, which has also given it tremendous pricing power. Given the surging demand for AI chips, TSMC is in a strong position moving forward.
TSMC sees its AI chip revenue climbing at a more 50% annual rate through 2029, making the stock a solid buy, despite it trading near its all-time highs.
