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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerCA, Inc. (NYSE: CA) provides
information technology (IT) management software. Its programs manage network databases, applications, storage functions and security options, operating across distributed computing environments. The firm also provides technical support and consulting services. CA has strategic relationships with Google (NASDAQ: GOOG), IBM (NYSE: IBM), Microsoft (NASDAQ: MSFT) and other IT market leaders. It is one of the world's largest software companies.
CA surprised the Street late last month, with fiscal Q3 EPS of 36 cents and revenues of $1.1 billion. Analysts had been expecting 25 cents and $1.04 billion. Management also guided FY08 EPS to $1.22-$1.26 ($1.09 consensus) and FY08 revenues to $4.25-$4.28 billion ($4.19B consensus).
The news
popped the shares out of a late January "cup" into the early February "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle".
Brokers recommend the issue with two "buys", eleven "holds" and one "sell". Analysts see a 12% average annual growth rate, through the next five years. The CA Price to Book ratio (3.36), Price to Cash Flow ratio (16.91), Price to Free Cash Flow ratio (22.05) and EPS Growth rate (50.00%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 73% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $20.21 and $28.46. A stop-loss of $21.00 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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