News and analysis

The fourth episode of the Dell saga. I can only speak for my own feelings, as initially I took this train in early September when Dell Technologies went through its then all-time peak at $70 per share. And now it is going to overcome $150, ha-ha. On the way to doubling the market value of Dell, I saw myself cowardly jumping outside in mid-February, when the ride just reached a $87 station and just showed misleading signs of fatigue. Yet, the correction phase was very short-lived. A bottom was formed at $80.5 soon. And it was the first day of March when Dell's Q4 earnings report made the stock soaring to nearly $130. Fortunately, I’ve calculated possible price adjustment targets to the more attractive technical area between $105 and $110. By some quirk of fate, this actually happened in mid-March to allow the crowd of desperate investors like me to buy these dips. We caught this last ride and already won above 40% of net climbing on charts, without even considering leverage factors. This is already an excellent result, against all mental challenges and other hardships of our common journey up the mountain.

What was the driver to prompt Dell Technologies rising by 11.21% in one trading session of May 15 again? The company's press release tells us that the newly developed PowerEdge family of Dell servers for cloud service providers (CSPs), and smaller businesses as well, introduced great performance upgrades. Dell PowerEdge T160 and R260 servers may double the performance at almost half the physical footprint (42% in case of T60), as a bright example, while R670 and R770 CSP Edition servers provide a new standardized server architecture "for simpler deployment and serviceability", going to be first to market with the Intel ® Xeon ® 6 Efficient core processor to provide up to 2.3x more performance per rack compared to the previous generation. The T60 based server is 23% more power efficient compared to the previous generation. Thus, Dell is successfully expanding its already top-selling portfolio. In the AI era, Dell customers will get the computing power to handle necessary and more intensive workloads "across edge, core data centers and the cloud", including high-density and scale-out cloud workloads like virtualization and data analytics, while also trying "to manage power and emissions" due to smart cooling technologies and via the use of sustainable materials like unpainted metal chassis, according to Travis Vigil, a senior vice president at Dell Technologies. Through a special early access program, more customers could evaluate new servers so that CSPs can scale production from day one of availability.

Investment house monsters immediately raised their price targets for Dell. Morgan Stanley updated its target price from $128 to $152. “Even after a >100% move in the T12M, DELL trades at just 13x our new FY26 EPS of $10.12 (18% above Street) & remains the best way to play 1) building AI server momentum, 2) inflecting storage demand, and 3) an improving PC mkt,” its analysts said in a yesterday night's note. They suppose earnings of "just over $8 per share" in the financial year of 2025 already, against the consensus of $7.55, and as much as $10.12 in the next annual period in 2026, up from their own previous $9.11 estimate, betting on "continued quarter-over-quarter AI server backlog growth". “We believe the big tier 2 CSP win referenced above could equate to a $2B order this quarter, which means AI backlog at the end of the April quarter would be just under $4B, and potentially higher taking into account smaller enterprise wins, barring any material changes in rev rec in the April quarter,” analysts note.

Well, I am not such a smart guy to check these calculations or to estimate it in a more precise way than a Morgan Stanley leading team. Yet, I have enough brain to keep holding the stock during this summer, and I hope to see higher price peaks in the nearest two or three months at least, as long as the Wall Street indexes are setting new records.

Chevron (CVX) stocks have established a solid ground for an upward move after rebounding from the support of an uptrend that began on March 20, 2020. Over the past two months, the stock has traded sideways around $160 per share, indicating a period of consolidation and accumulation of upward momentum. CVX now appears poised to climb to $190, a level last seen on November 14, 2022.

The S&P 500 index has recently posted a new all-time high, driven by slowing inflation in the United States. This decrease in inflation for the first time in six months suggests that the Federal Reserve may soon cut interest rates, potentially boosting demand for oil. Additionally, the escalation of the conflict in the Middle East, particularly the ground operations initiated by Israeli forces in Rafah, Gaza Strip, could potentially disrupt oil supplies.

I plan to open a long position within $158-163 range targeting $185-190, which is 17% above current prices. The stop-loss could be set at $133, below the lows of January 18.

Wall Street indexes continue to grow in May, yet markets are wary that marginality of retail businesses may be affected by inflationary pressure. U.S. producer prices surprised investors on the upside this week by adding 0.5% MoM, with the so-called core components (excluding volatile energy, food and transportation costs) rising by 3.1% YoY to form the most notable jump for the last 12 months. We feel this is precisely the reason behind a rather cautious attitude to much better-than-feared Q1 numbers provided by North America's major home improvement stores owner Home Depot (HD).

Home Depot's comparable sales showed a 2.8% annual decline, and thus it was a move forward compared to a 3.5% drop as to the end of 2023. The Q1 report as a whole could be called mixed, even though EPS (equity per share) of $3.63 only slightly exceeded expert consensus of $3.60 but was as much as 28% higher than $2.82 in the Christmas quarter, while $36.42 billion of the company's revenue was nearly in line with $36.66 billion of consensus bets, 4.6% better than Q4 2023 sales but 2.4% lower than Q1 2023 sales in the same season of the previous year. Sales are also 28% up from the recent record of Q1 2020, set on peaking pandemic-driven demand, which is clearly a good sign for a bullish outlook, while Home Depot CEOs confirmed their full-year forecast. A delayed start to the spring season, an 1% decrease in transactions and a 1.3% drop in ticket size were cited, keeping intact expectations of at least a 1% surplus versus last year's sales.

Only time will show if this combination may be a catalyst for further dip-buying activity. At the first moment after the quarterly report, shares of Home Depot initially lost nearly 2.3% of its market price, but later recovered to +0.16% at the end of the trading session on May 14. Hopes for margin improvement in nearest months may lead the stock to cover the currently discounting distance from its $396.85 peak of March 21. As for now, the gains are roughly capped below $350 per share.

One very practical consequence is that the next wave of market's attraction to Home Depot may come in one of two technical cases, either on the clear breakthrough of this persisting $350 resistance area or if more attempts to drop the price may lead to testing levels which are 10% to 15% lower at first. A price range between $300 and $315 just looks suitable for extra demand ambitions of those investors who prefer to verify this ground would be more solid than the current levels around $340. Home Depot itself also repurchased $649 million worth of shares, compared to $2.9 billion bought back in the same quarter of 2023, which was probably another factor of the company's drawdown on price charts.

Most investment houses are now reiterating their Outperform ratings for HD, with many of them keeping price targets well above $400 per share. "Trends into the critical spring selling season will be a key focus. Our web traffic tracker and EPS Swoon or Pause preview report better April/May trends in consideration categories (Home, Auto) even if dollar sales remain down YoY," Evercore ISI analysts wrote.

Coin 98 (CNE) is down by 2.4% to $0.2460 this week, having hit a low of $0.2393 on May 15 before recovering slightly. The token is currently testing the support level at $0.2500 for the third time since April. Notably, it has dropped out of the ascending channel that had formed since October 11, 2023. This break from the channel support increases the likelihood of further downside movement.

The absence of fundamental factors to bolster Coin 98’s price adds to the bearish outlook. If the token fails to hold above the critical $0.2500 support level, it could potentially decline by 38%, targeting the next significant support level at $0.1500.