Magazine Loves EMC Stock

Posted by Mark Brousseau

In it's current issue, Kiplinger's Personal Finance Magazine names EMC one of its "5 Stable Tech Stocks You Should Love." Here's what the magazine had to say about the company:

As the business world grows increasingly digital, the amount of data companies must store is swelling. This unrelenting trend virtually guarantees steady growth for EMC Corp. (EMC), a leader in storage.

The market for storage hardware and software is plenty crowded, says Morningstar analyst Michael Holt, but EMC has differentiated itself by being "one of the first companies to push into network storage"--that is, storage on a central server. The company currently claims about 25% of this market. EMC's strategy is to sell customers both the low-margin hardware they need for storage and the high-margin software for smoothly accessing stored data.

Through its 84% stake in VMware, EMC is also "the leader in virtualization technology," says Halford. Virtualization, he explains, is an efficiency-improving technology that allows users to run multiple operating systems on a single machine. "Most surveys of chief technology officers rank virtualization as their top priority because the payback period on an investment is so short," says Jay Sekelsky, manager of the Madison Mosaic Investors fund, which owns shares of EMC.

The recession finally caught up to EMC in the first half of 2009. Sales and earnings per share fell 10% and 26%, to $6.4 billion and 34 cents, respectively, from the same period in 2008. Analysts expect earnings of 82 cents per share in 2009 and $1.03 in 2010, compared with $100 per share last year. At$15.19, the stock trades for 18 times 2009 profits and has popped 45% year-to-date.

What do you think?