Dell - buy at a discount

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 (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.

Dell Inc. (DELL) 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.

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

Summary:  As the economy recovers and stocks return to their trailing P/E ratios Dell (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. 

Jim Van Meerten is a Marketocracy Master

Link to charts and complete article