Happy Days Almost Here Again for Dell
The upgrade should produce positive results going forward.
Here's what I'm focused on this morning:
The computer giant landed an upgrade to Buy from Bank of America-Merrill Lynch, and the shares got a little bit of a goose, so I wanted to weigh in.
1. It's certainly seen better days, and as of late, the company hasn't received a great deal of love. But I've been a fan for quite a while now and I remain one (see Ticker Shock: Three Reasons Dell's Ready for a Challenge).
2. This company has super growth potential down the road, and at a smidge over 13.3 times this year's estimate, it's worth a closer look. Keep in mind that over the past year, it's pretty consistently taken out Street estimates, and going forward I think it will be just as consistent.
3. I'd like to see a little open-market insider buying at current levels here in 2010. That might make the stock compute for a lot more folks out there that are sitting on the fence.
4. I think the upgrade will have a positive effect in the coming days, as well.
The Boise, Idaho-based company took a whack in Wednesday's session on the heels of news that its going to scoop up Numonyx (see Bob Faulkner's article, Why Micron's Numonyx Acquisition Could Be a Steal).
1. I haven't been the biggest Micron cheerleader (see Five Reasons Micron Is Held Up Only by Hope), and I've certainly taken my share of guff for it. But I admit I'm starting to warm to this story.
2. The pummeling helped me change my tune, but the fact that it's trading under 10 times this year's estimate doesn't hurt either.
3. In the release, the company said: "Micron currently estimates that the transaction would be accretive to the company on both free-cash flow and non-GAAP earnings beginning fiscal year 2011." That's terrific, but I'd like a little more detail about exactly how much it could tag on in terms of earnings, and what the risks may or may not be.
4. I'm not sure I see a near-term home-run here, but under $9 a share, my ears are definitely more perked than they were.
Abercrombie & Fitch (ANF):
Justin Sharon points out in his article this morning that Oppenheimer upped its rating on the retail chain to Outperform.
Although I realize the stock has retraced some of its gains, I'm not interested (and I suspect I'm the only one in the entire civilized world).
My sense is that it trades at a way-too-costly 19.7 times the upcoming year's estimates. And with all of the competition for foot traffic, the lousy economy, and what's likely to be a tight-fisted consumer for some time to come (despite what the cheerleaders say), I think there are better places to belly up.
For my previous take on Abercrombie, click here.
Roth upped the California-based company to a Buy.
The upgrade could give the shares a goose, but I won't be climbing aboard on the heels of this news. What's the big catalyst here in the near-term? And what is there in terms of earnings or book value that's going to backstop me if this market tanks? I don't feel comfortable ponying up at current levels.
Have a great day!
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