The INVESTools Advisory, August 31 - September 4, 1998
1. Dell: A Tremendous Buying Opportunity (DELL)
Friday, September 4, 1998
Wall Street analysts predicted that the Asian economic
problems would pulverise the demand for PCs there and send
the soaring stocks of leading computer makers spiraling
downward. They were right, as shipments fell by nine percent
and computer stocks took their share of the recent market
hits. But though stock in Dell Computer (DELL) has dropped
with the rest, the number one PC firm actually saw its Asian
revenues increase 34 percent to $280 million for the latest
quarter.
Reasons to like Dell abound, according to growth stock guru
Jim Collins. For instance, he cites that stock in Dell more
than doubled this year despite the decline. The firm
recently stole the number one spot among computer makers
from Compaq, one of many testaments to the strength of the
firm's direct-purchase business model. The Board of
Directors recently approved a 2-for-1 stock split after
trouncing analyst estimates for the quarter by increasing
earnings more than 70%. All geographic and product areas saw
strong sales growth, and gross margin improvement on both a
sequential and year-on-year basis tell Collins that Dell is
"managing well in an extremely competitive environment."
The future for Dell looks even brighter to Collins. He
predicts much of the firm's growth will come from two of
its smallest but most promising segments, namely the booming
server business and direct sales over the Internet. "We
would view the recent weakness as a tremendous buying
opportunity," says Collins.
For more on Jim Collins' recommendation see "Analyst's
Review," September 1998, OTC Insight. Jim Collins focuses on
the inefficiently priced OTC market using analytical
techniques to select stocks and create portfolios.
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