Below are 10 stocks that made headlines this week for one reason or another. The ones that made this list have had some fundamental event occurred to either spur the stock price upward or in the opposite direction. With the exception of Yahoo (NASDAQ:YHOO), I currently have a buy rating on each of these stocks
Cisco Systems Inc. (NASDAQ:CSCO) rose .1% to $16.66 with 66,233,200 shares traded. I think this stock has been beaten to the degree where I feel that it is now grossly undervalued. Cisco said the company plans to “slim down” and “tighten its focus” on its core areas in an attempt to get profits growing again. Critics have called the company too scattered in its efforts while it faces tough competition in core products such as its routers and switches.
In a research report, Shaw Wu at Sterne Agee said he had separately analyzed the value of Cisco's major segments: Routers, switches and a variety of "new products" and services. Adding them back together he arrived at a value of $27 to $28 per share, even when discounting the price-to-earnings ratio compared to its competitors.
Dell Inc. (NASDAQ:DELL) fell 2.4% to $16.34 with 28,594,300 shares traded. Analysts applauded the results and raised their price targets, but also injected a note of caution, with several of them saying the reduction in component costs was temporary. "We cannot get constructive on shares of Dell until we see signs of a sustainable improved margin outlook," wrote Brian Marshall at Gleacher & Co.
Robert Cihra at Caris & Co. raised his price target on the shares to $19 from $17, but maintained his "Average" rating, citing pricing pressures in the commodity PC market. He prefers Apple (NASDAQ:AAPL) and companies with more exposure to the high-value enterprise market, like EMC and IBM.
Intel Corp. (NASDAQ:INTC) fell 1.4% to $23.54 with 96,052,300 shares traded. With shares rising about 22% since late April, Goldman thinks Intel has become dangerously expensive. Goldman Sachs cuts Intel to sell from neutral, seeing the stock’s 22% gain since last month post-earnings as unjustified. The firm expects processor shipments to slow for the rest of the year to compensate for 1Q shipments "well in excess of demand."
Goldman sees the Street reducing EPS views for Intel as “record” capex affects average selling prices and cost of goods sold. Goldman also cut the overall view on chip equipment stocks to "cautious" from "neutral," stating, “we expect strong 2010 and record 2011 capex to lead to excess supply and a 20% year-over-year decline in 2012 capex.
Level 3 Communications Inc. (NASDAQ:LVLT) fell 1.6% to $1.85 with 23,507,300 shares traded. Level 3 has 9.7% of its float shorted. Level 3 Communications, Inc. provides telecommunications and information services, including local, long distance and data transmission. The company also provides other enhanced communications and Internet services, and is involved in coal mining businesses. The stock is currently ranked second among the list of 10 stocks that might experience a short squeeze, according to Yahoo Finance.
Micron Technology Inc. (NASDAQ:MU) rose 1.1% to $10.17 with 34,442,900 shares traded. Billionaire David Tepper returned investors an astounding 132% net of fees in 2009 and 21% in 2010, and, as 2011 got underway, the fund manager remained bullish, telling CNBC in January that he's "cautious but optimistic" about equity markets and the economy. Given Tepper's outlook, his recently disclosed end-of-Q1 equity holdings, which show a big move away from bank stocks, are in focus. One of the stocks that Mr. Tepper was unloading from his portfolio was Micron. Regardless the stock ended up slightly recently but remains more than 30% under targets.
Microsoft Corp. (NASDAQ:MSFT) rose .1% to $24.72 with 37,412,000 shares traded. Not only did Microsoft acquire Skype, but the software giant said it won a round in the company’s ongoing battle with Google Inc. (NASDAQ:GOOG) over contracts for email and productivity software awarded by public agencies on Wednesday, as the city of San Francisco opted for the Redmond, Wash.,-based company’s technology.
City officials in San Francisco, located roughly 35 miles north of Google’s Silicon Valley headquarters, announced that employees in 60 departments and agencies are scheduled to move to Microsoft's Internet-hosted messaging and collaboration software, called Microsoft Exchange Online.
Oracle Corp. (NASDAQ:ORCL) rose 1.7% to $34.50 with 21,720,700 shares traded. Oracle just announced the availability of Oracle Communications MetaSolv Solution 6.2 with key enhancements to more efficiently enable communications service providers (CSPs) to launch and deliver services as well as provision and manage their network infrastructure at a lower total cost of ownership.
Sirius XM Radio (NASDAQ:SIRI) rose 2.3% to $2.23 with 80,484,061 shares traded. The shares of the satellite radio giant has rebounded recently after a couple of consecutive days of declines, Since reaching its 52 week high of $2.42 on May 11, the stock has retraced to a low of $2.07 on Tuesday 5/17 before rebounding. It appears that the concern of its recent antitrust settlement has subsided and investors appear to be more at ease with the issue now behind the company and are ready to focus on the future.
Staples Inc. (NASDAQ:SPLS) fell .2% to $16.60 with 21,979,900 shares traded. The office retail power surprised investors with weak first quarter results. As a result, management lowered its full-year expectations and investors lowered the stock priced significantly. But at current levels, the risk/reward in terms of investment appeal has become much more interesting.
Yahoo (YHOO) rose 2.4% to $16.35 with 36,942,900 shares traded. The company announced that it has agreed to acquire 5to1 Holding Corp., an online advertising alliance of major media publishers. 5to1 offers advertisers premium online ad inventory built on a proprietary publisher-controlled platform.
Yahoo said the acquisition will enable it to build upon its publisher partnerships and expand its premium inventory, extending its advertising leadership. 5to1 focuses on premium brands and media partnered in a marketplace environment, enabling more than 20 major media publishers to fill unsold inventory with premium ads. After the close of the transaction, which is expected in the second quarter, the 5to1 team will join Yahoo as part of its Ad Marketplaces group. Financial terms of the transaction were not disclosed, but media reports said Yahoo paid $28 million for the company.
Disclosure: I am long CSCO, MSFT, ORCL.