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Dell
Dell
In an effort to appeal to non-corporate buyers, Dell's formerly generic products can now be found in a painter's wheel of colors.
Get quote: DELL

When Michael Dell returned in early 2007 to the helm of the computer maker he founded nearly 25 years ago, costs at the Round Rock, Texas, company were spiraling out of control. Worse, Dell was losing market share to rivals HP and Apple. Nearly two years and more than 10,000 job cuts later, Dell's operating expense dropped 12% in the most recent quarter, compared with an increase of 24% a year ago. What's more, the company has regained market share this year, according to research firm Gartner.

Mr. Market, though, hasn't seemed to notice. That, along with the cash on its balance sheet, is what makes Dell's shares a great buy now. The company has nearly $7 billion in net cash, or about $3.60 a share. Exclude that from its recent share price of $10, and you get a price/earnings ratio of just under five, based on next year's earnings estimate of $1.31 a share. By that measure, Dell's shares are cheaper than 95% of all the companies in the S&P 500 and significantly less expensive than rivals HP and Apple, at eight and 12 on the same scale, respectively, according to Standard & Poor's. Once the quintessential growth stock, Dell has become a value play.



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Last updated December 17 2008: 10:12 AM ET
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