Promising Stocks in the Bargain Bin: Dell 

Of all the tidbits of insight I've heard over these crazy months, the most telling came from an investor on CNBC last fall who, being completely serious, advised, "There're only two positions to be in right now: cash, and fetal."

I get it. It's bad out there. Many companies that overleveraged their balance sheets are permanently impaired and will likely never rebound -- banks come to mind. We had an unprecedented boom; now we're in the middle of an unprecedented bust.

But history tells us time and time again that market panics and forced sell-offs indiscriminately throw the good out with the bad. Amid the frenzy over financial markets and the "sell-now-ask-questions-later" mood of global investors, opportunities like we haven't seen in decades are being created for bargain-hunting investors.

Using the wisdom of our 130,000-member-strong CAPS community, I've come across what could be one of those bargain opportunities: Dell (Nasdaq: DELL  ) .

CAPS Rating (5 stars max.)

**

1-Year performance

(49.8%)

Recent share price

$10.04

Forward EPS estimates

$0.91

Trailing-12-Month EPS

$1.25

Market cap

$19.5 billion

Current ratio

1.4 times

Fools bullish on Dell are also bullish on:

Microsoft (Nasdaq: MSFT  )
General Electric (NYSE: GE  )

Fools bearish on Dell are also bearish on:

Ford (NYSE: F  )
General Motors

Data from Motley Fool CAPS and Capital IQ, a division of Standard & Poor's, as of March 19.

I know, everyone hates Dell. It doesn't even seem like a close rival of Apple (Nasdaq: AAPL  ) anymore. Squint really hard, and you can start seeing parallels to the failures of Gateway. With shares down 70% in the past five years, investors haven't been shy about how they feel. It's ugly.

But is that five-year malaise over yet? Who knows, but we can back up a bullish argument with some numbers fairly easily.

Through a scanner delicately
At $10 a share, Dell trades at around eight times trailing earnings. That alone should put this company squarely on your value radar, but it gets better: Net of long-term debt, Dell has $3.70 per share in cash and equivalents. No one denies this company has been stuck in a rut, but investors are really at a point where they're justified to ask whether that rut is fully baked into the share price. Dell's a rock-solid brand name with a bulletproof balance sheet trading at levels it hasn't seen in years. That intrigues me.

So is it time to jump back in? Some investors think so. Responding to a previously made pitch, CAPS member aj350 recently wrote:

[Dell] is a cash flow monster.

looking around, [IBM (NYSE: IBM  ) ] has gone through this faze and so has [Hewlett-Packard (NYSE: HPQ  ) ] - both came out strong buy targeting services AND hardware. Dell is at the same conjecture, except their operations are still cash positive and they have a ton of cash on the books.

Another CAPS member, wickerdude, questions whether the doom and gloom is really even justified, writing:

PC's aren't dead. PC gaming isn't dead. Dell isn't dead. They have a better selection of systems not to mention they have great LCD's. Dell is coming up with some good styled products which were showcased at this years CES. These new products will directly compete with Apple's laptop and ultraportable lines. Almost forgot to mention, the netbook market has room for alot of growth. It only needs a true leader to emerge.

Your turn to chime in
What do you think about Dell? Are its woes bigger than I make them out to be? More than 130,000 investors use CAPS to share ideas and swap opinions. Click here to check it out and speak your mind. It's 100% free to participate

For further Foolishness:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Dell and Microsoft are Motley Fool Inside Value selections. Apple is a Stock Advisor selection. The Motley Fool is investors writing for investors.


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