Compaq Message Board - Msg: 1692683

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Technology Stocks : Compaq

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To: Kevin A. Lynch who wrote (3644)	7/2/1997 8:17:00 AM
From: Jim Garrison	of 97611

Kman: CPQ is not a core holding - it is a trading stock that I will sell if it gets too overvalued or breaks down technically. I consider it in the same class as, for example, EMC. Only tech core stocks are INTC and MSFT. Core holdings are always good businesses that I will hold unless the business changes dramatically - irregardless of price. My opinion is that DELL and CPQ are similar and not in the same class as INTC and MSFT. IMO DELL is very overvalued and CPQ is not cheap going into earnings. My current CPQ NAIC SSG evaluation (as of last weekend with price @98.5): Proj 5 yr growth 19.5% 5 year pe range: 16.4 - 8.5 PE eps last 12 months: 18.8 Proj PE based on next 12 months: 15.8 Upside/downside: 1.9 Proj total 5 yr return: 13.5 Price zone: 97<Hold<141 CPQ is almost at the top of historical PE range based on forward projected eps. Note that this is going into earnings and has to be discounted a bit. My technical indicators rate it a weak sell and overall I'm watching it for a possible sale. I use Zack's estimates for earnings. I think Zack's server is down so I can't go direct. Paper Zacks and Yahoo show june quarter consensus estimate at 1.39. This is versus 1.36 for 1Q. Sequential 2nd quarter earnings increases seem to be lowest. #'s I have for last year are: EPS Q2-Q1 = .12 EPS Q3-Q2 = .19 EPS Q4-Q3 = .38 If you are right at 1.69 you surely will make a bunch. Altho I don't think CPQ suprises much (3% last qtr). Time will tell - maybe the INTC and SEG warnings have really spooked the analysts. As I indicated in prior post, technically, i would expect it to at least retest high at 108 1/8 on good earnings. IMO, for options particularly, if it fails to close above then I'd take my profits real quick. Beware the looming summer doldrums right after earnings. My opinion only. Good trading, jim garrison

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