Steer clear of Dell

Dell (DELL) computers were a staple of the late 1990s and early 2000s. Michael Dell's business model transformed the company into a technology sector powerhouse by providing consumers with the best value or "bang for the buck". However, Dell struggled without its founder as its revenue and earnings continue to decline against fierce competition from HP, Toshiba, Sony and Acer. Despite Michael Dell's return to help revive the company, Dell won't be a good investment for some time.

Recently, Dell has been labeled as deliquent in its regulatory firings. Generally speaking, this type of action serves as a red flag, warning investors that more tough times are ahead in the near future. Another newsworthy item involves Dell's recent strategic alliance with Wal-Mart. Two low-cost providers teaming up seems like a well-designed match, but this partnership may actually hurt Dell.

Wal-Mart is known for poor customer service, something Dell already struggles with. By selling products in Wal-Mart, Dell expects consumers to be knowledgable enough not to need help. The problem here lies with Wal-Mart's target market, low and middle-class consumers who do not possess the computer skills and know-how required to purchase PCs or other computer equipment on their own. Additionally, Dell's perception and brand value will decline significantly due to this alliance. Higher-end consumers may link the company with lower-class America, discouraging high-end product purchasing.

A better play would be HP (HPQ), a company that continues to improve marketshare in the PC market and seems to have positioned itself well for the laptop battle. HP's valuation is still undervalued with Price/Sales ratio, Price/Book ratio, Price/Free Cash Flow ratio, and P/E over Long-Term growth all below the industry and sector average. Considered a buy according to most wall street analysts, HP was recently named to TheStreet.com's 5 best value plays.

Stocks to combat energy price inflation

As my financial blog points out, investors can benefit from the recent rise in gasoline prices. Here are some stocks to consider if you want to hedge against these prices:

PetroChina (PTR) - With now less then 1% owned by Warren Buffet's Berkshire Hathaway (due mainly to increased purchasing), PetroChina remains an appealing play in the energy sector. Despite the doubling of its stock price over the past two years, PetroChina remains undervalued by most measures including a P/E over LT Growth of under 1. Despite earnings declines this past quarter, improvements in margins and consistently high ROE and ROA make this a solid play. Taking into account the estimate growth in fuel demand in China and developing Asia, PetroChina figures to remain one of the top players providing oil and gas for the region.

Valero Energy (VLO) - A large-cap refining, marketing and distribution play that remains drastically undervalued despite a YTD increase of 25 points in the price. Despite weaker sales numbers last quarter, the earnings grew by some 35%. Sales typically improve during the summer months and earnings will continue to grow because of the widening spread between crude oil and gasoline prices. As refined gasoline continues to push upward, crude prices have steadied throughout much of the year aiding in the maximization of refiners profits.

Marathon Oil (MRO) - This is the best diversified energy play because Marathon is actively engaged in exploration and drilling, refining and distribution. If you want to hold one stock with the least exposure to market fluctuations, this is your stock. Reasonably valued with lots of stock growth left, it trades at just under 11x earnings while possessing solid debt ratios.

Other stocks to consider are Petroleo Brasileiro (PBR), the largest Brazilian energy company which possesses good valuation and growth potential, and Transocean (RIG), another major driller and oil exploration with outstanding valuation, a healthy balance sheet, and impressive revenue and earnings growth.