Computer Giants Worth Looking at

By Investopedia Staff | March 23, 2012 AAA

When it comes to the world of technology and specifically the world of computing, today's market leaders can easily become tomorrow's losers. That said, there might be a company that could still be standing years from now that deserves a great deal more attention than its getting from Wall Street and that is Dell, Inc. (Nasdaq:DELL)

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Why Dell Looks Fine And Dandy

Dell has certainly seen its share of ups and downs. A quick look at a five-year chart shows the computer giant has seen much better days during its existence. But there are several things worth noting about the Texas-based company right now.

First, its shares are above its 52 week lows. Second, the company has exceeded analysts' earnings per share expectations all five of the previous five quarters, which turns heads in this environment. Third, it trades at under 8 times this year's estimate.

That is pretty incredible given its size and the expectation that it will generate nearly $63 billion in annual sales.

The company was the talk of the town in November 2011 after it released its latest quarterly earnings. The company earned $0.54 a share, $0.09 ahead of expectations. The company's revenue number just missed expectations by $20 million.

Waiting for a general market sell-off may be a terrific opportunity for patient investors. (Learn nine simple rules to success from the talented Buffett, Gartman and Pearson read Financial Wisdom From Three Wise Men.)

Other Computer Giants Worth "Byting" Into Too

When it comes to this space it's hard to be picky since there are several companies to choose from. Hewlett Packard (NYSE:HPQ) is a company that is simply too big to ignore because besides its name, it has been performing on the earnings front, exceeding expectations in four of its last five quarters even with the new CEO turnover and strategy shift. Given the incredible popularity of its machines, about it seems likely the company will be able to continue to deliver on the earnings front.

International Business Machines (NYSE:IBM) is another organization that cannot simply be ignored given its ability to thrive over time and its recent high profile earnings-beating quarters. The fact that it trades at only 15.7 times this year's estimate could mean the stock still has some room to climb above its current level.

Another Way To Play

Choosing which computer company will perform the best can be difficult due to macro conditions or the fickle consumer. As an alternative way to invest in this sector, some investors might want to check into Target (NYSE:TGT) or Wal-Mart (NYSE:WMT), both of which sell laptops and or computer related accessories. And because consumers are likely to be extremely cautious with their funds in the next year, both outlets may garner a great deal of money and foot traffic in other departments above and beyond the electronics aisles.

The Bottom Line

Dell had a solid quarter and the beat we have seen is an opportunity to get involved. With our nation growing increasingly dependent on electronic gadgets of all kinds, Dell has a bright future. Its ability to beat estimates are attractive features as is its expected growth rate in the years ahead.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus
Related Analysis
  1. India Remains An Emerging Market Bright Spot
    Stock Analysis

    India Remains An Emerging Market Bright Spot

  2. Another Weak Eurozone Read - Ahead of Wall Street
    Stock Analysis

    Another Weak Eurozone Read - Ahead of Wall Street

  3. Still More Gains Ahead For Semiconductor Makers
    Stock Analysis

    Still More Gains Ahead For Semiconductor Makers

  4. 5 Stocks To Watch During Back-To-School Season
    Stock Analysis

    5 Stocks To Watch During Back-To-School Season

  5. Q2 Earnings Season in Rearview Mirror - Earnings Trends
    Stock Analysis

    Q2 Earnings Season in Rearview Mirror - Earnings Trends

Trading Center