Sandisk (SNDK 12.54%) has been one of the hottest stocks to own this year, with year-to-date returns of around 600%. Although it has fallen 15% over the past month, with many investors taking profits and cashing out, it remains one of the best growth stories thus far, as it has benefited from scorching hot demand for memory and storage products.
On Aug. 5, the company will report its fourth-quarter earnings numbers, which are likely to show strong growth yet again. Will that prove to be a major catalyst, and will Sandisk stock rally after those results come out?
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Sandisk's stock has gotten a boost after recent earnings reports
When a company posts strong earnings numbers, it can give investors plenty of reasons to buy its stock. And in recent earnings reports, with Sandisk displaying incredible growth, that's precisely what happened, with the tech stock proceeding to rally afterward.
The track record looks good, but the counterpoint to that would be that high expectations may be priced in at this stage; Sandisk stock trades at close to 60 times its trailing earnings, and thus, it may be more difficult this time around for strong numbers to be able to give the stock a significant boost after earnings.
In its most recent earnings report, which was for the third quarter, revenue rose by 251% year over year, totaling just under $6 billion for the period ending April 3. The tech company did tremendously well, and the bar may be even higher this time around, to be able to convince investors that it's worth such a high premium.
NASDAQ: SNDK
Key Data Points
Is Sandisk stock worth buying right now?
I believe that after it reports its latest numbers on Aug. 5, Sandisk will get another boost, especially if it continues to struggle before then. At the very least, a strong performance could give investors the incentive to buy the stock and send it back to at least its recent highs. The market has been volatile this year, but as long as Sandisk's numbers continue to show strong growth and the guidance is promising, I believe it'll rally after its fourth-quarter numbers come out.
That being said, this can be a bit of a risky stock to own given its high valuation and the industry's cyclical nature, which is why it may not be a suitable option for many long-term investors, despite its impressive results. However, Sandisk may be an attractive buy at its reduced price and with earnings coming up, for investors who can stomach the volatility and who are comfortable monitoring the stock closely.
