Most investors consider Dell Computer (NASDAQ: DELL) a dog of a company. Since the firm's founder, Michael Dell, took over as CEO, his only real skill seems to be cutting costs. The firm has lost market share in the PC category and is behind companies like Hewlett-Packard Company (NYSE: HPQ) and International Business Machines Corp. (NYSE: IBM) in the server business.
The problems at Dell show in its stock price. The company trades at just over $10, down more than half from its 52-week high. It has underperformed IBM and HPQ by a significant margin over the last year.
With all that in mind, it was surprising to find an analyst who thinks that Dell's stock can double. According to Barron's, Craig-Hallum analyst Christian Schwab still thinks the company can "get its groove back." Aside from looking at metrics like P/E, Schwab thinks that IT spending will get better in the second half and that Dell will continue to bring costs in line with sales. Usually that means firing people.
The twenty-two analysts who cover Dell think earnings will be down in the next fiscal, so Schwab is on an island by himself. If the thinks the stock will double, that is exactly where he belongs.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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