Every day, a virtual mountain of news emanates from the major wire services. And every day, Wall Street analysts and traders are inundated with a plethora of rumors - some true and some untrue.

To that end, let's go through some of this week's more popular news stories and rumors in a little more detail.

Dell Computer (NYSE: DELL)
Last week, the computer maker announced plans to start selling its PCs in 3,000 Wal-Mart (NYSE: WMT) stores nationwide. This week, it announced plans to sell its wares (more specifically its notebook PCs) at 580 Sam's Club stores, beginning next week.

So, what's the quick and dirty on Dell? While I suspect these deals don't sport high margins (because Wal-Mart and its Sam's Club outlets are notorious for putting the pinch on vendors), this is really good news for Dell.

I doubted the company could or would go the retail route; however, the fact that it has struck deals with two large, volume-oriented retailers may allow it to gain some serious ground on other box makers going forward, including Hewlett Packard (NYSE: HPQ).

Although I applaud the company's efforts to expand its distribution, Hewlett Packard has been eating the company's lunch.

In fact, as I pointed out in a previous article, HP seems to be growing its lead over Dell in the lucrative server business. Plus, ongoing cost cutting initiatives should make HP a big force to reckon with over the next year. (To read the full article, see Hewlett Packard Still On A Roll.)

Make no mistake, the Dell/Sam's Club relationship is good news. However, I'd prefer to see more on the new-product front and/or the establishment of several other relationships with high-profile retailers before jumping in.

Trump (Nasdaq: TRMP)
New Jersey newspapers are reporting that Dune Capital Management - a firm that is run by ex-Goldman Sachs (NYSE: GS) employees - is bidding for Trump's casinos in Atlantic City. Rumor has it that other suitors might emerge as well, given "The Donald's" apparent willingness to sell the casino empire he built from the ground up.

However, a recent research note put out by Bear Stearns (NYSE: BSC) analyst Carlo Santarelli nixes the notion that a buyout is in the cards. Santarelli suggests that the amount of capital that any buyer would have to infuse into the company to make such a transaction profitable, as well as looming competition from neighboring states, could put the kibosh on any such deal. But frankly, I disagree.

Despite the growing competition from Las Vegas, the Gulf Coast, and the developing market of Pennsylvania, the company's properties within Atlantic City remain among the most enviable because of their location and proximity to major thoroughfares. Additionally, I suggest the company could be run much more effectively and cost efficiently by a private firm. Remember, it costs a great deal of money to make all of those SEC filings and to maintain an investor relations function.

I think that a deal will be hammered out, and that the company will be taken out at or near the $20 level. That said, I stand by my previous comments that I'd prefer to see the stock pull back to the $12 or $13 level before jumping in, as insurance in case a deal does not materialize. (To read Glenn Curtis' previous take, see An Equity Roundup.)

Netflix (Nasdaq: NFLX)
There is a rumor circulating that Amazon (Nasdaq: AMZN) might make a bid for Netflix. Proponents of such a combination argue that a deal makes sense because Amazon could then market its services to Netflix's broad base of customers, and because the two companies could theoretically realize a host of money-saving synergies.

However, I don't think that such a combination will happen for a few reasons. First off, I don't think Amazon wants to get bogged down in a battle with Blockbuster (NYSE: BBI) for market share when it has more important fish to fry. Also, I don't think that the company wants to go head-to-head with a deep-pocketed player such as Apple (Nasdaq: AAPL) and its recent foray into downloadable content.

I like Netflix. However, as I've mentioned in previous articles, I wouldn't buy the stock solely on the speculation that it might get taken out.

Merck (NYSE: MRK)
There's a rumor circulating that Merck will announce another round of layoffs, and that the number of people being fired could be large. True or not, I think that this is a great time to buy the stock. The company has held up pretty well despite the ongoing Vioxx litigation.

It also has a vast cash horde of about $4 billion that it could theoretically use to repurchase stock, or to make accretive acquisitions. In addition, with all of the layoffs and cost-cutting measures that have been instituted over the last couple of years, the company seems to have a lot more leverage over its operating line.

If layoffs are announced I think that the stock could pop a couple of dollars. To be clear, this could be a good entry point for those with a longer-term investment horizon, thanks to what I perceive as the company's improving longer-term fundamentals. However, I would not suggest getting in on the stock solely with the expectation of a quick share-price pop if layoffs are announced.

Looking to cook up a market-stomping stock portfolio? Check out our FREE report "7 Ingredients to Market Beating Stocks" and get started right now!

Related Articles
  1. Stock Analysis

    3 Resilient Oil Stocks for a Down Market

    Stuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
  2. Economics

    Keep an Eye on These Emerging Economies

    Emerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
  3. Stock Analysis

    Is Pepsi (PEP) Still a Safe Bet?

    PepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
  4. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  5. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  6. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  7. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  8. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  9. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  10. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!