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EMC Corporation (EMC) develops and supports much of the internet's infrastructure. It offers storage systems and software, information security products, virtual and cloud infrastructure products, and software and services for enterprise capture.

One of the reasons for EMC's success can be attributed to its position as the best of breed storage products provider. Information storage revenue was up 12% in Q4 2011 over Q4 2010. Its other divisions are also thriving. Its security division grew 16% in Q4. VMware (VMW), the standard for virtualization in enterprise data centers, has increased 27%. Its acquisition of Isilon for cloud and big data needs quickly brought EMC success as its revenue doubled year over year.

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EMC introduced the concept of the private cloud, which is the transformation of customer's data centers into flexible pools of on-demand virtual infrastructure that the customers can control. Much of EMC's growth comes from what's known as big data, which are huge volumes of unstructured information. EMC provides the solutions to handle, store, and process this complex information.

From a valuation standpoint, EMC is slightly undervalued as its stock trades at only 2.85 times book value per share. It has a trailing PE ratio of 23.82, a forward PE of 13.37, and a PEG of 1.01.

EMC shows good profitability with a profit margin of 12.3% and an operating margin of 18%. Its operating cash flow is a healthy $5.67 billion and levered free cash flow stands at $3.06 billion. It currently does not pay dividends, but funnels the money back into the business.

Its earnings per share are $1.10 with gross profit of $10.03 billion. Overall revenue grew at 14%.

In its four quarters in 2011, EMC met earnings expectations in Q1 and Q3, but exceeded estimates in Q2 and Q4. It has 21 upward earnings revisions for 2012 and 8 upward earnings revisions for 2013. This leads me to believe that it will have more positive earnings surprises this year and next.

EMC introduced the concept of the private cloud, which is the transformation of customer's data centers into flexible pools of on-demand virtual infrastructure that the customers can control. Much of EMC's growth comes from what's known as big data, which are huge volumes of unstructured information. EMC provides the solutions to handle, store, and process this complex information.

The company is expected to grow earnings annually at 15.01% for the next five years. This is a nice, steady growth that should allow the stock price to grow at about the same rate. This stock should beat the market over the next five years as the average S&P500 stock is expected to grow at 10.7% annually.

Unfortunately, the market and EMC look temporarily overbought. The next negative catalyst in the overall market should trigger the next short-term sell-off in the stock. Although I don't know what the catalyst will be or exactly when it will happen, I do think that the market will have a 3% - 5% pullback before moving higher. I think that this pullback will be the time to start a position in EMC for those that don't currently have one. Aggressive traders may wish to short EMC for a trade until the stock reaches its oversold level.

Source: EMC Corporation: Short-Term Sell, Long-Term Buy