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Technology Stocks : Dell Technologies Inc.
DELL 152.40-1.5%Nov 5 3:59 PM EST
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To: Kevin Lee who wrote (218)9/20/1996 9:16:00 PM
From: Samir Shubaily   of 176387
 
At 32.6X earnings this stock is a screaming short.

Timing when stocks drop is a guess at best. The why is because of valuations. The computer industry trades at 14.9X earnings. Compaq trades at 15X earnings, and Dell at today's close of $ 86 1/2 trades at 32X earnings. The bigger it gets the harder it is to grow. The X-mas season will really bring the competition out, and the price wars. Already Toshiba is heavily marketing its desktop computers with all the media gizmos on it. Sony is just now starting to push its computers and who knows who else will be entering. They will get some market share, and everybody's piece of the pie will be smaller. The pie itself is also not growing like it was (Dataquest's latest estimates).

Regardless of any warnings coming out, this stock is due for a correction. I am looking to take a bigger short position on Monday. After a month of good news on Dell and major money pouring in because of its addition to the S&P 500 (by index fund managers), there only remains bad news. This is why we have cycles.

Dell's chart from the past 2 years shows a volatile stock. It could easily drop to below $50 if the mood on the PC industry changes; and the mood changes in this business once a month.
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