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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (6475)	3/1/1998 12:25:00 PM
From: Chris	Respond to of 42787

DELL PRICE ANALYSIS Subject: DELL \| Previous \| Next \| Respond \| Earnings \| You have 1 unread message To: Mark Catalano (31393 ) From: David E. Taylor Saturday, Feb 28 1998 12:45AM EST Reply # of 31546 Mark: I'm not sure I qualify as a "knowledgeable" Dell stockholder, but I've been trading the stock pretty successfully for the last two years (and having lots of fun doing it). So FWIW, here's how I see the next few months playing out for DELL. First, it's useful to look back at July/August of last year when DELL had it's last big runup, because the general market conditions and sentiment were about the same then as now, the only difference being that in July we had the split first and the earnings second, whereas here it's the other way round, which is actually more positive (July was like Alice in Wonderland, "first the verdict, then the evidence"). Starting from an underpriced base of 120 on 7/7, the stock ran up about 43% in 3 weeks to172 on 7/25, the Friday morning of the split. The momentum players (me included) decided enough was enough, and the stock dropped 10 points in about 30 minutes of trading soon after the opening, and closed the day at 162. Monday 7/28, the stock hit a low of 77 (154 pre-split), whereupon I (and plenty of others) loaded up again. The stock hit 85 (170 pre-split) by 7/31, fell to 75 (150 pre-split) again by 8/11, and ran right back to 87 (174 pre-split) by the time of the earnings on 8/19. One more low of 80 (160 pre-split) on 8/31, then non-stop to the hi of 100+ by 9/23 on reports of general record world wide sales of PC's and CPQ/DELL grabbing market share from everyone else. Overall gain in the 10 weeks was about 70%, which I attribute about 50% to the initial stock underpricing and the split, and 50% to the earnings and market share reports. So what does that suggest for the next few months? Starting from an underpriced base of 100 on 2/2, we've now run up about 40% already. My projection was for the stock to hit 145-150 by Friday morning 3/6, at which point (if not sooner) I'll be out (temporarily). With 5 days to go, we're already at 140, and I believe we'll see some profit taking as soon as the stock gets close to 150. In any event, you can expect a "dip" (if that's the right word) of up to 10 points when the stock hits 150 and the momentum players decide to take profits. But not to worry, there are plenty of people who have missed out on this 40% increase who'll run the stock right back up to 150 again (my broker is urging me to sell CPQ and buy more DELL at 140, and I suspect he's not the only one). After the split, I expect the stock to trade in a 70 to 80 range, with the low in late March/early April after the general market 8-10% downdraft due to the March earnings pre-announcements, and a general uptrend until it hits 85 by the end of April, 2 weeks before the next earnings report. So if you like trading, have at it, you can't go wrong. If you mistime a low and buy in too early, hang in there and DELL will not let you down. If you can't stand the stress of trading and don't want to miss out on a upswing, just buy/hold the stock, stick it under your mattress, and come back in May when it's up to 85+. Present consensus EPS estimates for DELL's Q1 are 0.83 (range 0.78 - 0.86) from First Call (as of 2/22), and 0.80 (range 0.75 - 0.86) from Zaks (as of 2/21). My financial model for DELL, which has been on the money to within +/- 0.01/share for the last 4 quarters, currently shows 0.88, and has yet to be tweaked for the reduced competition from CPQ, which I'll do after the next IDC sales report for PC's comes out. So I have no doubt we'll see further significant increases in DELL after the May earnings report, and yet another record breaking DELL year. My projection for year end is for 90-100, after yet another 2:1 split. DELL is just a license to collect OPM! Good luck with your investing. David T. \| Previous \| Next \| Respond \| View 2 replies to this message View SubjectMarksBookmark this Subject Return to Computers One or more words separated by spaces: Subject Titles Only Full-Text Messages with Links <Picture> Send questions and feedback to webmistress@techstocks.com Terms of Use