Insight Enterprises (NSIT) presents an interesting future buying prospect for position traders.
On Friday NSIT out its March lows at about $16.50 and looks likely to continue lower to $15.50, or perhaps a bit lower. That level should be important support as it is basically the bottom end of the range of the last few years. Further down is the 2004 lows near $14.
The technicals is where the negatives end, though.
NSIT is expected to make $1.83/sh in FY08, and $2.08/sh in FY09. Those are 12% and 14% gains respectively. There have been 5 analysts expectation increases over the last three months against none to the downside.
On the valuation side, NSIT is trading at at trailing PE of 10, which is at the low end of the 5 year range of 9-26 (average is 16). At a sub-10 forward PE, NSIT is below the 5-year average of 14, and the forward PEG of 0.6 is well below the 1.0 average.
Over the last 6 months company insiders have been net buyers of over 90,000 shares. A total of 243k were bought against 153k sold. Funds currently own about 40% of the shares.
Price targets among the analysts are in the $19-$26 range.
In general terms we like the upside prospects for NSIT. It’s just that in the near-term we have to likely sit through some price declines. After that, though, if the earnings results hold up as expected, it would be no surprise at all to see this stock back in the middle $20s.
Drops like this one just started, generally play out over 2-3 weeks. That gives us a basic timeframe in which we can look for a potential bottom in NSIT, meaning a good long entry point. Keep and eye out, though, for strength showing up in the market – or at least a lack of weakness. That would likely be an indication of a trend stalling out. If theÂ fall underwayÂ doesn’t run the full course, it would be a sign of underlying strength, meaning one could be that much more aggressive taking on long positions.