Palm is on track for a cracking quarter - so much so that its stock, currently trading at around $40, is a "compelling" buy.

That's the verdict of Goldman Sachs, which today told clients who hold Palm stock that it "expects Palm to beat our estimates", according to a Reuters report.

Palm shares have been down of late on anticipation of a weak quarter, which ends just about now. Expectations of weakness is down to reduced sales thanks to component famine induced limitations on the number of devices Palm can get into the retail channel.

Look further, says GS, and you'll see that there are plenty of Palms out there. Supply doesn't meet demand, GS reckons, but that's OK as long as the gap between the two doesn't grow. Right now, it's enough to keep buyers hungry for Palm kit.

"Noting the 15-20 per cent discount for new shrink-wrapped Palm products on eBay we are convinced that present supply is in check and the company will not miss the top line this quarter because of limited supply,'' says GS' report.

GS' verdict: "We view Palm as one of the few safe havens for growth during this quarter."

Palm closed Thursday 30 November at $36.1875, but opened today at $39, up nearly eight per cent. At press time, it had reached $40.875, an increase of 13 per cent on yesterday's close.

The PDA company is due to report its latest quarterly results this month. Back in September, for the three months to 1 September, it noted revenues up 127 per cent year on year to $401 million. Operating profit hit $23.9 million (four cents a share), though one-off charges took this down to a final $17.3 million (three cents a share).

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