Dell Is at a Discount

| About: Dell Inc. (DELL)

This morning on Barchart I wanted to find stocks having current price momentum that were selling at a big discount to their normal Price/Earnings ratio and noticed Dell (NASDAQ:DELL) sold at an 18.0 Price/Earnings ratio over the past 16 year and is now at a 9.4 P/E ratio. That sounds like a discount to me. The price momentum has held steady during the current market down turn.

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Dell Inc. is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Dell, through its direct business model, designs, manufactures and customizes products and services to customer requirements, and offers an extensive selection of software and peripherals. Their sales are fairly balance between business and personal computer sales ant they are starting to get sales traction in emerging markets.

Factors to Consider

Barchart technical indicators:

  • 48% Barchart overall technical buy signal
  • Trend spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 8 new highs and up .95% in the last month
  • Up 5.84% in the last trailing 3 month
  • Relative Strength Index 50.22%
  • Trading around 15.94 which is above its 50 day moving average of 15.84

Fundamental factors:

  • Wall Street brokerage analysts like this stock with 13 strong buy, 3 buy and 16 hold recommendations for their clients. There are 4 analysts that think the stock will under perform the market
  • Sales are expected to increase by 4.10% this year and another 4.60% next year
  • Earning projections are a little better increases of 18.90% this year and 1.10% next year. Earnings are expected to increase by 6.00% annually over the next 5 years

General investor sentiment:

  • This is a widely followed stock on Motley Fool and of the 6,856 readers expressing an opinion 72% think the stock will beat the market
  • CAPS readers vote 3,387 to 1,1636 that the stock will beat the market
  • The more experienced All Stars agree with 930 to 303 vote for the same result

Summary: As the economy recovers and stocks return to their trailing P/E ratios Dell looks like a prime candidate to give long term investors an annual total return in the neighborhood of 19 % - 23% over the next 5 year. In this market when I'm not sure what will happen from day to day I'd like to have stocks that have positive projection of increases in both sales and earnings.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.