This Is the Only Stock in the S&P 500 That's Been a Hotter Buy Than Micron Technology This Year

As of the end of last week, shares of Micron Technology (NASDAQ: MU) were up close to 300% since the beginning of the year. It has been among the hottest stocks to own. But what may surprise you is that despite such impressive gains, it's still not the best-performing stock on the S&P 500.

The one S&P 500 stock that's been outperforming Micron this year is Sandisk (NASDAQ: SNDK). Its gains of over 780% have dwarfed Micron's performance. It's also a big name in the memory market, and so it may not be all that surprising that it's been doing well given the ongoing supply shortages. The big question, however, is whether it can still go higher.

Image source: Getty Images.

Sandisk's seemingly modest valuation may have been attracting more investors

Although Sandisk's stock is up a staggering amount this year, with a market cap of around $300 billion, it's nowhere near what Micron is worth right now (close to $1.2 trillion). For growth investors, that could make the memory stock a more appealing buy, with the hope that it might have more room to rise higher in the long run.

Ironically, however, in terms of earnings, Sandisk is the more expensive stock to own. Based on analyst expectations, it's trading at a forward price-to-earnings (P/E) multiple of 32 while Micron trades at a multiple of just seven. The S&P 500, meanwhile, averages a forward P/E multiple of 21. When based on earnings, there's a stronger case to be made for Micron to rally higher than there is for Sandisk.

Is Sandisk stock still worth buying?

Sandisk's stock has been red hot, and its financial performance has also been impressive. Revenue was up 251% in the quarter ending April 3, totaling just under $6 billion. And its bottom line flipped from a loss of $1.9 billion a year ago to a profit of more than $3.6 billion this past quarter. Demand for its flash memory products remains high, as is evident in its guidance for the current quarter, which calls for revenue of up to $8.3 billion and for gross margin to be up around 81%.

Sandisk's stock may still rise higher due to its strong results, but with its valuation ballooning and becoming much more significant of late, its returns from here on out may be more limited. Ultimately, I think there are many cheaper and better tech stocks to consider instead of Sandisk.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.