iBooyah.com Investment Matters

Dell is still the number one PC manufacturer in the world. While Hewlett Packard (CPQ) has made some progress, it is still a distant second.  The company’s business model of manufacturing custom PC directly to consumer continues to provide Dell the price advantage over its competitors. Some would disagree, but I believed Dell has almost perfected the PC assembly process.  Although Dell is known for serving the consumer market, the Enterprise business remains strong and growing.  The company’s consumer electronic appears to be taking off as well.  Moreover, the $14 billion last quarter is still impressive, albeit it was a little below expectation as most analysts were expecting $14.2 billion.  The stock has recently taken since they warned last month.

The 52 week low was $18.52 a few weeks ago.  Since then, it has been stabilizing in the low 20s.  The fundamental appears to be intact.  The reason for the decline in revenue was due to soft sales of PC due to the anticipation of Microsoft (MSFT) next windows Operating Systems.  It appears there is no catalyst for consumer to venture out and buy new hardware at present.  However, if Microsoft’s does release Vista in January 2007 as promised, this stock should also move upward in tandem.  This stock could easily be in the high 20s by the end of 2006.

In comparing this stock to Hewlett Packard (CPQ), specifically looking at the P/E ratios and Earnings per Share, Dell is relatively inexpensive at 15.5 and 27.9 respectively.  EPS is 1.47 and 1.25, respectively.  Are there risks of further drop in the share price, of course! However, simply looking at the fundamentals, this stock is inexpensive and does deserve some consideration.  In my view, if you can buy DELL below $20 per share, it would represent a good value.  The latest earning release will further drive this stock further down as the accounting probes will cast a cloud over Dell for awhile.  This stock will a $15 stock in a few weeks. Pick it up then.