Sandisk (SNDK), which makes NAND memory chips, has risen nearly 500% this year and ranks second in the S&P 500 for gains, as data center build-outs drove demand that absorbed all available production capacity. The company is shifting to a 'New Business Model' (NBM) of contracts with some clients that set a price floor and ceiling and commit volumes, which the author says makes future cash flows more predictable and could reduce cyclical swings. The author argues the stock is still priced as if a cyclical downturn is coming, at 6.3 times forward earnings, and that the shift to contract-based work could lift its valuation premium. The author concludes the opportunity is compelling enough to consider buying shares now, before the market reflects this transformation.
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