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Ticker Shock: Three Reasons Dell's Ready for a Challenge


Friday's top stories and stocks with potential to move.

When it comes to my commute I'm generally a complainer, as I'm sure most of you can attest to. But last night, it was as if my bus had wings; a sort of flying chariot, telepathically hurling through the atmosphere at warp speed. And as no small bonus, I got to sit next to the bus character I've nicknamed Marilyn Monroe. Sure -- you have to squint your eyes to see the resemblance. But compared to The Astronaut (who reclines his seat all the way back), The Lumberjack (who saws wood through the entire trip), The Baseball Player (who sits with his legs wide open) and Loud Talker (who can't get off the cell phone), this lady was a dream seatmate.

Asian stocks were a mixed bag. The Hang Seng was down 0.71% and the Nikkei was up 0.57%. European stocks were, however, showing me some green earlier this morning. And here in the US, we're currently trading lower.

Here's what I'm focused on this beautiful Friday morning:

Dell, Inc (DELL):
Did you happen to take a gander at its second quarter? Surely Michael Dell was somewhere doling out high-fives last night.

It put up $0.28 a share excluding items, which was a nickel better than expectations. Its top line came in better than expected, too. And in between the lines there was nothing to sneeze at either: Its gross margin as a percent of sales got a nice goose up from the comparable period last year.

My thoughts:

1. This was a surprisingly strong quarter and the stock could get a well-deserved goose here in early trading.

2. I feel this is a $20 stock (at least), but I'm reluctant to chase it too high given that the larger market is ripe for a correction.

3. Keep in mind that this good news can cut both ways. Next quarter you can bet that shareholders are going to be expecting another rabbit to pop out of its hat. I believe it's up to the challenge.

For my previous take on Dell, click here.

Tiffany & Co (TIF):
Excluding items, the company that's become synonymous with fine jewelry put up $0.39 a share in its second quarter. That was an impressive $0.06 more than what analysts had expected.

My eyes also honed in on the line in the release that said it was looking for $1.65 to $1.75 from continuing ops this year. That's definitely better than the $1.58 estimate I'm seeing.

My take:

1. The earnings were good, but not dazzling. I think it would be a mistake to make an assumption (based on the better-than-expected number) that Americans as a whole are somehow willing to spend big money on luxury items. That's going to take some serious time.

2. There could be a trade here today, but I'm not totally digging it. My gut tells me its glory may be relatively short-lived.
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No positions in stocks mentioned.

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