Is There a Bullish Case for Dell?

CHEAT SHEET Analysis: Dell’s Stock Chart Speaks Volumes

A core part of our CHEAT SHEET investing framework¬†compares a stock’s price against its moving averages. Thanks in part to the Goldman upgrade, as of December 3 Dell was trading 6.83 percent above its 20-day simple moving average, or SMA, and 4.92 percent above its 50-day SMA. However, reflecting its poor performance over the past year, the company was still trading 21.43 percent below its 200-day SMA. Some investors with a lot of faith and a high risk tolerance could interpret this as a sign that the stock is cheap.

Since the beginning of 2012 Dell has been in a pronounced downward trend, losing nearly 33 percent of its value this year to date and nearly 37 percent year over year. The company suffered a sharp sell-off in May when it lowered its second-quarter revenue guidance below analyst expectations.

So… About Those Bulls

Plenty of bears growled at the Goldman upgrade and plenty more will growl if investors rally some faith and decide to put their money back into the company. Looking at the trends¬†does not build a very convincing case for Dell or the industry, but the case was never meant to be strong — just, not as bad as it sounds.

“While we expect companies more exposed to traditional PCs like Dell will face continued pressure, we believe that expectations have become too bearish and imply an overly draconian outlook for the computer market,” explained the analyst in the note from Goldman.

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