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Four Reasons to Watch SanDisk

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The company has simply been pummeling Street estimates,

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Asian stocks were a mixed bag overnight. The Hang Seng closed down 0.72%, but the Nikkei finished up 0.49%. Meanwhile Europe was in slightly positive territory early this AM. And here in the US, we're currently trading higher.

Here's what I'm focused on this morning:

SanDisk (SNDK):
The shares got a nice little goose in Monday's session thanks to its goosed first-quarter outlook.

Some thoughts:

1. With the stock trading at or near its 52-week high, I expect a great deal of retail and institutional folks to be paying it some mind in the coming trading days. And because of that I think that the momentum could keep on trucking.

2. The company has simply been pummeling Street estimates. Call me crazy, but I think it deserves a lot more loving than it's getting for that.

3. Despite the pop yesterday, I'd argue that at under 14 times this year's estimate, the stock is still a good value given the company's fututre growth potential.

4. I can easily see the stock heading to the mid- to upper-$30s given the recent momentum and the eyes that are likely to be on it.

JDS Uniphase
(JDSU):
The California-based company and one-time high-flier got a nice little goose yesterday, seriously outperforming the broader markets.

My two cents:

1. The shares have been on a tear lately, which is very hard for me to ignore. However, at the risk of sounding like a broken record (and receiving lots of emails from the bulls), I continue to think the stock is way ahead of itself based on the paltry earnings that are expected here in 2010 and in 2011.

2. What would it take to get me to warm up to it? Theoretically, I'd like some evidence that it has the potential to blow away the current-year estimate, which is just $0.36. I'd also like a better feel for where this company could be in three to five years' time. At present, I haven't a clue on that, which is why I'm reluctant to belly up.

Be sure to check out Terry Woo's take from Friday.

Qualcomm (QCOM):
There was more than a bit of good news that came out tonight after the closing bell. Its board approved a dividend increase and it announced a pretty big stock repurchase program.

My feel on Qualcomm:

1. Although I don't think the shares are a great bargain at just over 16 times this year's estimate, I don't think the nod for the dividend goose or a share-repurchase program are things that would be kicked around unless it was at least somewhat sweet on the company's future potential-earnings power.

2. Let's not forget that an insider indirectly bought 2,200 shares late last year at $45.09 which is much higher than we're trading now. So there's some incentive to get this stock higher.

3. Overall, these are good signs that the shares could still have some legs left in them. My eyes are peeled and Qualcomm is squarely on my radar screen.

Toll Brothers (TOL):
Per Bloomberg: "The largest US luxury homebuilder had the best week of sales in February since 2006 last week, Chairman and Chief Executive Officer Robert Toll said in a CNBC interview."

My thoughts:

While this is likely to give proponents of the homebuilding sector the warm and fuzzies, the bottom line here is that Toll Brothers will still likely post a decent-sized loss this year. So no, I'm not excited about the stock. And despite the upbeat comments, I definitely won't be bellying up to the high-end homebuilder. If things are so glorious, maybe insiders should cozy up in the open market right now.

For my last take on the company, see Toll Brothers Spending Lots on Lots.

Have a great day!
No positions in stocks mentioned.

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