SanDisk Is a Winner and It's Just Getting Started

NEW YORK (TheStreet) – SanDisk (SNDK) investors have made a lot of money. That's the most understated way I can put it. The stock is up nearly 50% for the year to date and 175% over the past two years.

Given that shares have soared more than 500% over the past five years, investors are faced with the decision of when to cash out. It's a problem market participants everywhere wish they had. The stock closed Monday at $105.59, only percentage points away from a new 52-week high.

Although trigger fingers are inchy, it would be foolish to abandon a winner like SanDisk, especially before management completes the company's transition into the enterprise.

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SanDisk's recent $1.1 billion all-cash deal for Fusion-io (FIO) positions the company on an accelerated path to become the name in enterprise SSD storage (solid-state drive), surpassing the likes of Seagate (STX) and Western Digital (WD)

Like Seagate and Western Digital, SanDisk has avoided a complete collapse of the hard disk market. As Big Data titans EMC (EMC) and NetApp (NTAP) have proven, growth in enterprise storage can be lucrative. That and SanDisk's exposure to the gaming industry, which has adopted the SSD standard, will prove highly profitable.

By 2016, the total addressable market for enterprise SSDs will grow to more than $8 billion, more than doubling the current market. All of this supports a $130 stock price in the next 12 to 18 months when factoring Fusion-io's accretive potential for double-digit earnings-per-share starting in 2015.

That enterprise SSD will grow to $8 billion is only one bullish factor. SanDisk's long-term vision of how the data center will change is the larger objective. SanDisk wants to emerge as a leader in the flash-transformed data center. This transformation will help customers like Apple and Facebook better manage their heavy data workloads.

When that market fully takes shape, SanDisk, which has a strong global scale, will have enough leverage to compete with market incumbents like EMC and NetApp. It will be able to grow its revenue in ways that that it would have taken Fusion-io decades to do without the deal.

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