Here we go again with Motley Fool Stock Advisor recommendation CDW (NASDAQ:CDWC). I'm not sure why, but it seems like there's a none-too-small faction on Wall Street that is perpetually looking for a reason to bury this company. Today's latest crime against investing humanity? Missing the average revenue estimate by a bit more than 1% -- for which CDW shareholders were treated to a nearly 6% stock price drop.
Granted, sales growth of 6.6% and operating income growth of more than 5% is not exactly the stuff of which growth legends are made. And I can also understand why some investors might be worried about trends like Apple Computer (NASDAQ:AAPL) moving more of its desktop and notebook distribution to a direct sales model. But let's also keep this in perspective, folks -- we're talking about a highly fragmented market that's still likely worth about $100 billion a year.
CDW does have plenty of competition. It must deal with companies with direct retail operations, like Apple and fellow Stock Advisor pick Dell (NASDAQ:DELL), as well as other wholesalers and distributors like Ingram Micro (NYSE:IM), Tech Data (NASDAQ:TECD), and InsightEnterprises (NASDAQ:NSIT). There are also fears that product delays or economic conditions could hurt IT spending from time to time. But CDW has been there before and survived it.
It's certainly not game over for CDW in my view. The company still has the opportunity to recruit more customers -- there's plenty of room left in Europe and Asia, for instance -- and drive some consolidation by getting existing customers to place more of their orders with CDW.
I'll grant that revenue growth needs to improve, and that the company needs to keep a close eye on its margins, but I can't shake the notion that a whopping return on invested capital is a strong indication that this company is already doing more than a few things right. Should skepticism keep pushing these shares down, I'll definitely be watching for an opportunistic price.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
