ChartWatchCentral Premium Stock Picks

Dell-icious

by
Christina Nikolov
Founder/CEO, ChartWatchCentral, Inc.

Date: August 12, 2010
Company: Dell Computer.
Ticker: DELL
Price: $11.99
Opinion: Bullish

Comments: Dell computer is looking more and more 'Dell-icious' right now, for several reasons. First, the shares are more than 33% below their April 23rd peak at $17.52, even though the company reported 30 cents per-share earnings for its April quarter, which is 15% above the projected bottom line of 26 cents. Per-share earnings for the July and October quarters are slated to soar 25% and 39%, while fiscal year ending January 2011 and January 2012 should see respective earnings surges of 27% and 16%, corresponding to $1.26 and $1.46 per share earnings for those years.

And as if this isn't enough, Dell Computer is currently trading at 9.5 times 2011 projected earnings and 8.2 times their 2012 expected take. Not to mention, DELL also touts price/book value, price/cash flow and price/sales figures of 4.0, 9.9 and 0.4, compared with 5.2, 16.8 and 3.7 for the Personal Computer System Industry.

From a technical perspective, DELL's shares are sitting at a level which we consider to be an excellent entry point, since it is the site of at least five price reversals over the past 18 months, the most recent being an upside revarsal which occurred last month. This is a critical level which really should not be breached if the shares are expected to head higher in the near future. Adding to our bullishness is an indicator which you might be familiar with, known as Moving Average Convergance Divergance (MACD). This indicator shows the relationship between two moving averages of prices. The chart clearly illustrates a MACD uptrend while the share price went nowhere since July 6th, much like the sideways 'double bottom' consolidations of earlier this year and early 2009.

That said, we strongly believe Dell Computer's shares will soar to $16.00 over the next several months and highly recommend adding some to your portfolio at this level. For those of you who want additional bang for your buck, try your hand at the November 12 call at $1.02, or the February 2011 $10 call at $2.65. If the shares soar as we project, these options should rake in respective returns 588% and 226%.