EMC following positive trading channel

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 percent of the outstanding shares. Over the past fifty-two weeks, EMC has traded between $9.44 and $14.75. A stop-loss of $11.85 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.