A Buy rating has been issued in these circles for Palm Inc. (NASDAQ: PALM), but there are several qualifiers.
Palm left a great deal of market share gains behind, as a result of what looks like inadequate production of the Palm Pre, but the view from here argues that strong reviews from technology critics and a the slow-but-continual increase in applications, will enable the Pre to achieve good things for this device manufacturer.
Further, Pre, not as Web/task-diverse as Apple's (NASDAQ: AAPL) iPhone, nor as message-rugged as Research In Motion's (NASDAQ: RIMM) BlackBerry series, nevertheless should find a market that exceeds expectations. Apple has already recognized this by announcing lower-priced, next-generation iPhones. Further, institutional investors have also seen the inherent value in the smartphone trend -- it has bid up PALM's shares for six months from about $1.10 to more than $14.50.
Still, Palm is a high-risk stock, so it's not for the squeamish. And it's also overbought short-term, so wait for a pull-back to $11 to $12. The First Call F2009/F2010 EPS estimates for PALM are a loss of $2.37 to a loss of 80 cents.
Stock Analysis: Palm Inc. is a high-risk stock. Consider buying a 25% position in Palm after a pull-back to $11 or $12, then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Keep in mind that PALM may not pull back to $11 to $12. Sell/stop loss if you were to buy shares in this company: $4.50.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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