The economy continues to send mixed signals. By most conventional measures, things have slowed considerably. That’s seen in everything from housing to the job market. But things were also running red hot before, so the full picture still looks strong.
At the corporate level, companies are largely cutting back. But in some areas, they’re continuing to invest now. One space where that’s happening is in IT spending. That’s a boon for companies that cater to that need.
Companies that provide IT services should continue to thrive right now, as the digitization trends of the past few years continue.
One company showing strong results from IT spending is Dell Technologies (DELL). While the company saw continued weakness in its better-known personal computer manufacturing business, growing IT spending can provide a source of steady revenue for years to come.
Shares of the computing giant trade for under 7 times forward earnings. With Dell shares down by nearly a quarter in the past year, investors may be overlooking a strong rebound bargain here.
Action to take: Investors may like shares at current prices. The recently-raised dividend will give investors a 3.2 percent dividend yield while they’re paid to wait for a rebound.
For traders, the July $45 calls, last going for about $1.50, offer mid-double-digit returns on a move higher for shares in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.