I had a little difficulty understanding the strength of DELL, I knew it's one of the favorites among investors in 1996 and all the way till now. Especially this hot summer, after late May it hit $99, it has moved ahead another 50% almost. Certainly you have plenty of reasons to support it can go higher and higher, but I just felt it difficult to understand:
1, Its PE, comparing to other PC vendors, which has pe in 20s, DELL is the only one has a PE of 41 (today), at this PE, Compaq could be $240 by the end of this year.
2, Its business model, Dell is famous for its direct sale model. and it was benefiting from that both on the stock and on the earning, but I don't believe other companyies willwould leave that market alone to Dell, actually it already had Gateway 2000 competing it, and I think CPQ, HWP, IBM will also compete with DELL vigorously.
3, Its stock manipulation, it has broken its Bolinger band by a decent percentage, MACD, DMI, %K, %D all indicate it will have a correction before going up again.
So with the cheer of seeing DELL making new highs everyday, I see possibilities seeing it correcting soon, and need more ways to support the momentum,
Tom |
