The post-crash environment has been very tough for makers of
computers and peripherals. Competition has been extremely
intense, and many consumers have shifted from traditional PCs to
tablets and smart phones as their main sources of computing
With this backdrop, many firms have faltered, but a few have
managed to persevere despite the immense challenges. One such
company that is starting to find its way again in the space is
Hewlett Packard (
The company is usually regarded as a member of the 'old guard'
of the PC world, and was best known for its home use products.
However, the company has begun to reinvent itself and find new
opportunities, namely in the printing and enterprise groups.
These segments, while not quickly growing, have helped to
stabilize the company's floundering personal systems division and
give hope for the firm in both the short and long term
Analysts are starting to take note of the trend too, as the
vast majority of analysts have recently revised their estimates
upward for both the current quarter, current year, and next year
periods. The magnitude of the revision has also been pretty good,
suggesting that analysts are expecting pretty good things out of
the company going forward.
This widespread optimism over HPQ has helped to propel the
company to a Zacks Rank of 1 or 'Strong Buy', along with a great
Industry Rank. These factors suggest that the stock could be
poised to continue to move higher in the near term, especially if
analysts continue to stay bullish on the firm ahead of the next
earnings report in May.
If the estimates picture isn't enough, consider that HPQ has
incredible momentum to start 2013. In the first quarter of the
year, the stock added more than 65%, suggesting to many that a
bottom has finally been hit and that better days will continue to
be ahead for this stock.
The stock is also trading at low valuations, even with the
huge surge as of late. Price/Sales, and Price/Cash Flow metrics
are both below half of the industry average, while the company
currently has a 2.2% yield as well.
While that 2.2% yield might not sound that impressive, it is
far better than many other big tech names in the space, and it is
on par with the S&P 500 as well. So, even if trouble does hit
this stock in the near future, this solid dividend should help to
alleviate some concerns of more risk adverse investors.
Yes, HPQ has had some significant trouble in the past and its
stock has lost a big chunk of its value since the 2008 crash.
However, the firm is starting to turn things around, moving
aggressively into other sectors and stabilizing its bottom
This has been a winning strategy for the firm so far in 2013,
and if the analyst estimate trend is any guide, it could continue
into the second quarter as well. That is why now could still be a
great time to get in on this top Ranked stock in order to ride
the turnaround story in this tech giant a bit higher.
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