Though i dont think dell is grossly overvalued, i do think that cpq is the better buy at these levels. I think cpq deserves a p/e of about 30 and dell a pe of about 50. Sure dell is growing quickly. But for how much longer. Michael Dell says until at least 2001. But who really knows??
Predictions for between now and june 1998.
CPQ will hit $50 Dell will hit $175 presplit.
Which is the better buy 30==> 50 or 131 ===> 175.
Go CPQ go.
Side note. Dell options are outrageously overpriced reflecting its outrageous volatility. CPQ options are very cheap now. Take advantage of that fact. Eg July 37 1/2 calls going for $1 1/4
until it *proves* that DEC is an asset instead of a liability.
Get ready for up to 2 long years before you see Compaq at $50.
Of course starting from $25 or lower, which is where it's headed short term, that would be doubling your money in two years which is way better than a sharp stick in the eye.
Personally my investment goals are for more than 100% return in the next 2 years. I can get a 100% return from 3 years in an SP500 index fund if the bull market continues. Why should I risk Compaq proving that the DEC acquisition was a mistake if I'm interested in safety ? In other words, if I want to own a company like IBM I'll buy IBM.
CPQ doesn't have to *prove* anything for the stock to begin upward movement, or to hit 50. It needs to make some reassuring noise on it's earnings for Q198 ( which it will ), they come out April 16th, this will prop stock price, then it needs to make those earnings on APril 16th (which it will) for a nice leap in price, then it needs to outline it's plans for Digital ( April/May) that will be the larget and most sustained rally leading up to full Digital integration acretive to earnings (LAter part of 1998). With *some* tech stocks higly inflated, CPQ will be more than happy to harbor those profits, and it's even on sale right now! There, now I've gone and been a Prophet myself.Zim will be eating his words regarding CPQ. I hope he slinks away then, he's already shown himself to be a coward by not emailing Peb, and running an ducking from questions.
Dell options are expensive, but well worth it. I have a couple of grand on March 135 calls. I hope your right about $175 pre-split. I was hoping for $150 pre-split with an upward trend next week to $80-$85 and then it is time to sell. Then take a portion of those profits and purchase an April 70 put. Then purchase a May 85 or 90 call. This is legalized gambling and I love it.(as long as I make $$$$).
This BB is for DELL, if you want to promote CPQ, then please go to CPQ's BB. Otherwise spare us your preaching. CPQ says the're having problems and here you come from no where saying they are going to be better. Send your resume to CPQ they sure as hell need your expertise. Please do not take this personal but