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Why Hewlett-Packard's Dip Is Opportunity


Company has deep pockets and recently bumped up its earnings guidance.

Happy New Year, everyone. Here's hoping that 2010 turns out to be a better year all around than 2009.

Asian stocks were mixed overnight. The Hang Seng was off 0.22%, but the Nikkei ended up a little more than 1%. European stocks were showing me some green early this morning, too. And here in the US, we're currently trading higher.

Here's what I'm focused on this fine Monday morning:

Hewlett-Packard (HPQ):
The California-based company took a bit of a thumping on Thursday, closing down more than a point on some decent volume.

Some thoughts:

1. As I pointed out in The Many Bells and Whistles of Hewlett-Packard in late November 2009, the company has some deep pockets, and it recently bumped up its earnings guidance. Those things are still big turn-ons for me.

I think at least some of that selling was last-minute profit-taking. And remember, the broader market was off pretty sharply, too, so I'm not reading too much into it.

The estimates for this year and next year have been edging up recently.

4. I'm still excited about this company and see Thursday's dip as an opportunity rather than a really big problem.

Berkshire Hathaway
Seems like Warren Buffett has done pretty well for himself. On Thursday after the bell, this article on the stock's stellar performance grabbed my eye.

Here are some of my thoughts about the next 10 years:

Although Berkshire's stock has certainly done unbelievably well and I'd be crazy to bet against it right now, what will happen if Buffett has to step aside, which I think will happen a few years down the road?

While Buffett is certainly no dunce and Berkshire can go on without him, I doubt it would have the same panache without him. Right now, it seems many hop into the stock with few questions asked because they know Warren is calling the shots and is an excellent steward of capital. But will the next line be as wise? And even if he or she is, a lack of a cult-like following may lead to a lack of stock performance.

This argument is nothing new, but I figured I'd say it again, given the new decade and the fact that many eyes will be on him and the company as the scoreboard resets to zero.
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No positions in stocks mentioned.

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