IBM and CML Are Both Buys for Earnings Season

October 13, 2009

Compellent Technologies (CML) rated “strong buy”

About CML: Consider Compellent Technologies (CML) a mini IBM. The company offers data storage solutions to maximize efficiency and ensure important files don’t get lost in cyberspace. Though a small-cap company, CML specializes in cutting-edge software and services that rival technologies some of the big players in the field have.

Current Strength: CML has continued to innovate and expand due to decent cash reserves. The company is expected to post yet another jump in sales growth for the quarter, to the tune of about 25%! Most importantly, Compellent is so strong that a buzz is building about a takeover—by none other than industry giant IBM. Anytime a big-name company is considering buying you out, it bodes well for the bottom line.

Future outlook: The numbers show a stunning upwards trend for CML even during tough economic times. At the end of 2008, the company posted a 100% earnings surprise by doubling Wall Street expectations for the fourth quarter. The analysts didn’t learn their lesson, because CML posted another 100% earnings surprise in Q1 of 2009—and then a 150% earnings surprise in Q2! It’s logical to expect another huge report in a few weeks when CML releases Q3 numbers.

The Verdict: Buy this company immediately before the earnings surge. Between the buyout buzz and the prospect of another massive earnings surprise, this stock has everything going for it right now. CML isn’t just a buy, it’s a strong buy.

(For a complete in-depth look at this company, visit the Portfolio Grader stock report on CML here.)

Stocks of the Week
IBM (IBM)	Compellent Tech. (CML)
Reports Earnings 10/15	Reports Earnings 10/28
Average Earnings Surprise (Past 3 quarters): 6.2%	Average Earnings Surprise (Past 3 quarters): 116.7%
Positive Analyst Revisions (Past 90 days): +10.7%	Positive Analyst Revisions (Past 90 days): +25.0%

Sound Off on My Picks

IBM reports quarterly earnings on Thursday, October 15, and Compellent reports a bit later on October 28. My analysis shows that both of these stocks are set to post very strong earnings reports in the coming weeks, so now is a good time to enter these stocks.

Remember, each Tuesday I’ll be talking about companies that YOU want to hear about. Stock of the Week readers Enrico, Salvador, Judy and Henry all asked for my take on IBM by emailing me at stocks@navelliergrowth.com, and this installment directly addresses their concerns. You can send me YOUR stock suggestions, and I’ll pick the most popular company next Tuesday and give you my in-depth analysis.

I also want to hear what you think of my take on IBM and CML. You can post your comments directly on this article below, and I strongly encourage you to join in the conversation. Just register with IntenseDebate by clicking here, and you can post as many comments as you want on NavellierGrowth articles, free of charge.

I look forward to hearing from you with some stocks to discuss next! In the meantime, I will be posting more entries in my Market Blog over the next several weeks as earnings reports roll out, so be sure to check in with me regularly.

I’ll be in touch with you again on Tuesday, October 20, with the next installment of Stock of the Week. Until then, take care!

Sincerely,

Louis Navellier

P.S. Don’t forget to send me your stock ideas! Email them to me at stocks@navelliergrowth.com. I look forwarding to hearing from you!