Patrick, That's great! I'm sorry I missed it.
I'm still trying to figure out if Gateway is undervalued. It's really a tough call. On one side, it is trading at a p/e of only 19, while other computer manufacturers are trading at much higher multiples. Also, the earnings growth is expected to be spetacular. Furthermore, with the recent downgrades, the stock has not been punished too much. Lower brokerage opinions coupled with Gateway's strong fundamentals could mean future earnings and reccomendation upgrades.
However, it is trading at record levels, and resistence is setting up at around 55. The other ominous sign is that this is about the highest p/e it has been able to maintain.
I still am holding my shares of Gateway, in hopes that DELL earnings will push shares higher. This is very risky, because personally, I think DELL is overvalued. it is a trading at a fairly lofty 26 times earnings. Also, another thing I'm looking at is its business numbers. 90% of its revenues come from large corperate contracts. This means well over a billion (if not 2...I'm not sure exactly). Can they really maintain this level of corperate involvement. Virtually all large companies have a network, and it seems like these new computers by IBM, etc, which are cheap and easily networkable would take away frm DELL'S business.
I'm no DELL expert, and this is just my opinion
-Brian |
