Why Dell Has More Room To Run

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An improving economy typically leads to outperformance in hardware stocks. That is especially true this year as IT spending is forecasted to soar. This trend should help drive Dell Technologies (DELL) to new heights.

As the economy improves, many companies are feeling more comfortable increasing their spending. Hardware stocks, especially, have seen their shares soar since November in anticipation of increased IT spending. But the best is still yet to come.

Hardware stocks typically outperform the market in economic recoveries. Still, due to lower than usual spending last year, in 2021 hardware stocks are forecasted to skyrocket as survey after survey of IT leaders indicate a massive increase in spending.

In particular, one stock has seen its price targets shoot up over the past couple of days due to this trend. Dell Technologies Inc. (DELL - Get Rating), due to its PC solutions and hybrid-cloud offerings, is expected to see massive share gains this year. But before I get into evaluating the company, let’s recap the week.

Market Commentary

Stocks soared on Monday after a blowout jobs report Friday. The U.S. economy added 916,000 jobs in March, which beat the expected number of 675,000. The report confirms the accelerating economic recovery, as states reopen and fiscal stimulus supports businesses to rehire workers. Both the S&P 500 and the Dow Jones Industrial Average closed at record highs.

The market retreated on Tuesday after setting records the day before. Stocks finished mixed on Wednesday as investors digested the release of the Federal Reserve’s meeting minutes. High growth stocks plummeted as longer-dated interest rates rose. On Thursday, the market was higher, with the S&P 500 index hitting a new high as the 10-year Treasury yield dropped to 1.63% after a higher-than-expected jobless claims number.

Stocks finished higher again Friday, even as inflation readings topped forecasts. The increases in global producer prices pushed bond yields in early trading but eased off by the afternoon. Investors, though, seem more concerned with the upcoming corporate earnings-reporting season, which kicks off next week.

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