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Portfolio Doctor For June 11th, 2009 AUDIO
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Jud Pyle
Market Analyst for
Paek-6 Investments and
the website ONN.tv
Chicago, IL
Cisco: CSCO
Total Debt/cap: 21.67 %
Cash/share: $5.81
Gross Margins: 64%
Operating Margins: 19%
P/E : 15.28x (based on current fiscal year estimate which ends in July).
Dividend: no dividend
Story/ my take
HOLD: Company reported better than expected earnings in early May, reporting eps of $0.30 vs consensus of $0.25, although revenues were light coming in at $8.16B versus $8.07B. Leader in the space, has started to make comments that they will begin to be aggressive in acquiring companies, recently said “we didn’t bring $34b in cash just to have it there for security”. For a long term investor I like, would probably use any dips to buy, although the name could tread water for a little while given that we are getting close to upper end of valuation ranges for the name, we will need to see a more clear turn around in IT spending and a better sense of what companies they might look to buy before it can move materially higher. Translation: HOLD
Research In Motion: RIMM
Total Debt/cap: no debt
Cash/share: $2.68
Gross Margins: 38.17%
Operating Margins: 21.16%
P/E : 21x
Dividend: no dividend
Story/ my take
They report next week. Competition is increasing for them between the iPhone and the new Palm Pre, but they continue to be the industry standard for enterprising smart phones and their new consumer oriented models are gaining some traction (although iPhone continues to be the standard there). the name can go higher, might be a good time to buy, but this name will be riskier then something like CSCO so you need to be comfortable with that if you’re interested in RIMM. But I prefer to SELL and put my money elsewhere after the run we have had.
Hewlett Packard: HPQ
Total Debt/cap: 31.54%
Cash/share: $5.40
Gross Margins: 23.52%
Operating Margins: 8.98%
P/E : 9.95
Dividend: $0.08 quarterly, 0.86% yield
Story/ my take:
Reports Q2 (Apr) earnings of $0.86 per share in May, excluding non-recurring items, in-line with the First Call consensus of $0.86; revenues fell 5.0% year/year to $27.35 bln vs the $27.42 bln consensus. Co issues in-line guidance for Q3, sees EPS of $0.88-0.90 vs. $0.89 consensus; sees Q3 revs flat to down 2% vs current consensus for roughly flat sequential revs. Co reaffirms guidance for FY09, sees EPS of $3.76-3.88 vs. $3.71 consensus. Sees FY09 revs down 4-5% vs current consensus of a ~4% decline and previous guidance of down 2-5%. I would hold this one as well, and look to buy below $34. IF you don’t own it, don’t bother.
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