EMC The Storage Giant | Ed Butowsky

In an article in the Investor’s Business Daily, by Christina Wise, she talks about the various merger talks that have been circling the industry. These rumors have been helping stir up major stock prices for such companies as EMC Corporation (EMC), which developes storage technology for cloud computing, and VMware (VMW), which EMC is majority owner in. Below is just a little of the analysis Christina has offered up to investors for information.

Investor’s Business Daily
What’s In Storage for EMC?
By Christina Wise
October 22, 2010

•In its Q3 results, reported earlier this week, EMC’s sales growth was up 20%. That’s a little less than the 25% minimum often seen in market leaders.
•Earnings rose a solid 30%. However, earnings growth has slowed in recent quarters. You’d prefer to see earnings trending up.
•The company raised its earnings forecasts for the rest of the year. Analysts have also recently revised their estimates upwards. They see earnings growth of 39% in 2010, followed by 15% growth in 2011.
•EMC’s return on equity is 13%, below the 17% minimum often seen in leading stocks before they make their big price runs.
•U.S. hedge funds and mutual funds own 22% of shares, and the number of funds owning EMC has risen over the last 3 quarters.
•The stock’s Up/Down Volume Ratio is 1.4. The ratio measures investor demand for a stock. A ratio above 1 means there are more buyers than sellers.

Chart Analysis
•Late last month, EMC broke out of a base-on-base pattern (Point 1).
•It didn’t find much traction, and soon pulled back to its 10-week moving average line (Point 2), where the stock has been finding support.
•The stock has been climbing up from the 10-week line over the last couple of weeks, with some up days coming in on above-average volume.
•Ideally, you’d like to see the stock continue to bounce up on heavy volume. If it does, the buying range would be between the 10-week line and 5% above the 21.83 peak in the pullback (Point 3).

Stock Checkup
•At 94, EMC’s Composite Rating ranks 6th within its 19-member Computer — Data Storage group.
•It has the second highest EPS Rating (95) and 3rd best SMR Rating (A) among its peers.
•The stock has an Acc/Dist Rating of D, #18 within the group.


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