Wednesday, April 6, 2011

Time to Buy Lexmark (LXK)?

With the energy sector and commodity stocks garnering a lot of attention recently, some companies in the tech sector have been trading at low valuations, offering what appears to be excellent buying opportunities, like with Lexmark International, Inc., (NYSE:LXK).

Earnings estimates for Lexmark are $4.69 a share for 2011 and $4.64 in 2012, so the PE ratio is approximately 7.5 at those levels.

These shares have been trading in a range of $31.69 to $48.07 over the past 52 weeks. The 50 day moving average is $37.30 and the 200 day moving average is $37.74.

Because Lexmark's shares have been under pressure recently and are trading below the 50 and 200 day moving averages, buying incrementally in order to take advantage of expected dips would be a good strategy.

The printer cartridge business of Lexmark offers residual income for the company.

Lexmark was trading at $36.18, gaining $0.16, or 0.44 percent, as of 1:54 PM EDT.

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