Monday, June 13, 2011

Tech Data Corporation (NASDAQ: TECD) Q3 2011 Price Target

Recent price: 44.69$
P/E Ratio: 9.81
3 Months Target Price: 50$

Company Description
According to Reuters, Tech Data Corporation is a distributor of information technology (IT) products, logistics management and other value-added services. The Company serves approximately 125,000 value-added resellers (VARs), direct marketers, retailers and corporate resellers in more than 100 countries throughout North America, Latin America and Europe. During the fiscal year ended January 31, 2010 (fiscal year 2009), the Company acquired certain assets of Scribona, AB. In February 2011, the Company announced that it had created two new business divisions: HP Solutions Division And Networking Solutions Group.

Confidence Margins
Strong resistance $54.25 (+21%)
Light resistance $47.62 (+7%)
Light support $42.50 (-5%)
Strong support $41.13 (-8%)

This information technology distributor is currently missing the favor of the market, mostly since the company missed it's first quarter analysts' estimates for its earnings. This event should be seen as a slight mishap and investors will notice that they overreacted to the news. Tech Data Corporation is still profitable and will provide good returns to investors.

Entry strategy
For the cautious investor:
Buy the stock for 45$ or less.

For the risk-taking trader:
The September 2011 45$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 270$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 50$, or keep it until 54$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches 50$. This should provide a very interesting return if the underlying reaches the target price as the contracts will get in the money.

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