Hilary Kramer's Daily Picks & Pans

Guest blogger: Larry Schutts, vice president of Stockwinners.com and a contributing editor for Theflyonthewall.com. Larry looks for stocks with technical and fundamental characteristics indicating gains in the next 30 days. However, price movements may be volatile. He includes a stop-loss price in each post. Consider selling a position should the stop-loss be violated.

EMC Corporation (NYSE:EMC) is a leading developer of information infrastructure computer technology. Corporations and government agencies use its RAID (redundant array of independent disks) storage systems, NAS (network attached storage) file servers and associated software to effectively manage large quantities of data. The firm claims the largest storage-dedicated direct sales and service force in the world. A number of major computer companies resell its systems.

EMC surprised the Street on Tuesday, when it announced Q4 EPS of 17 cents (ex-items) and revenues of $3.21 billion. Analysts had been expecting 16 cents and $3.17 billion. Management also guided FY07 EPS to 71 cents (64 cent consensus) and FY07 revenues to $12.7 billion ($12.63B consensus). The news promises to keep EMC shares cycling through a positive, four-month trading channel. The price is currently consolidating near the base of that channel, where oversold CCI, Momentum and Stochastic technical parameters suggest the potential for a rise back toward the top. Correspondence of the stock's 50-day moving average to the base of the channel backs the rebound notion.

Brokers recommend the stock with five "strong buys," ten "buys" and twelve "holds." Analysts see a 21 percent growth rate through the next year. The EMC Price to Sales ratio (2.79), Price to Book ratio (2.71), Price to Free Cash Flow ratio (24.77) and Sales Growth rate (18.63%) compare favorably with sector and S&P 500 averages.

The stock is one of those used to calculate the S&P 100 and S&P 500 Indexes. Institutional investors hold about 69% of the outstanding shares. Over the past 52 weeks, EMC has traded between $9.44 and $14.75. A stop-loss of $11.85 looks good here.

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• #1 Comment from eegg447 
  1/24/07 9:38 PM | Permalink

  Following up his excellent analysis of Quanex Corp. (NX), the Guest Blogger/host now calls our attention to another well-positioned company (EMC).  This one, too, looks like a good investment, at least for the near-term.  Glad to see these entries put a bit more "meat on the bones" of recommendations here.  (And thank YOU, Larry, for the advice about RTP and HEB.  I see from your Stockwinners.com website you don't usually cover cheapies like HEB, so I appreciate your insight on that one all the more.  Bloggers: Check out the NX entry/comments.)