Cart (0)
business newsEight Reasons HP Stock is a Smart Buy
Why you shouldn't overlook the largest technology company in the world.
PRINT
 |
|
Today I want to look at Hewlett Packard (HPQ). The company is one we all know (and if you don’t, hang your head in shame.)
HP has bounced back and is way off its lows, but it's really not getting anywhere near as much loving as I think it should. In fact, there are several things that intrigue me about it right now:
1. The computing giant is trading right around 10 times this year’s estimate. That’s darn cheap -- especially since it’s expected to grow 11% per annum in the next 5 years.
2. Over the last month or so, estimates have moved higher, which piques my interest. Estimates in the last 30 days have gone from $3.71 to $3.74 for this year, and from $4.03 to $4.09 for next year.
3. It’s met or beaten expectations in every one of the last 4 quarters. Call me a loon but I’d much rather bet on a company that’s making its numbers than one that’s not. As an aside, a little company you may have heard of called Dell (DELL) has beaten estimates in 3 of the last 4 quarters.
4. Data shows a director, Robert Ryan, bought 7,500 shares at $34.64 in May -- that’s a lot of coin. And Ryan is no dummy. The HP website explains:“[Ryan has] served as Senior Vice President and Chief Financial Officer of Medtronic, Inc. (MDT), a medical technology company, from 1993 until his retirement in May 2005. He also is a director of UnitedHealth Group Incorporated (UNH), General Mills, Inc. (GIS), The Black and Decker Corporation and Citigroup, Inc. (C).”
5. In its second quarter, revenue was down from the year before. But a few years out (as economic conditions pop back), its revenue and EPS could go much higher. 6. It sends a great message when a company repurchases its stock. With that in mind, check out this line from the second-quarter earnings release: “HP utilized $801 million of cash during the second quarter to repurchase approximately 24 million shares of common stock in the open market.”
7. While we're on that release, check out the nearly $13 billion in cash/equivalents/short-term investments on its balance sheet. That could open a lot of potential doors for the company. (Maybe buybacks, dividends, acquisitions?) 8. Check out that dividend history.
So there you have it folks -- my bullish case.
Quick sidebar: Anyone else out there think Kim Jong Il, the North Korean leader, deserves a swift kick in the pants? I’d pay to do it.
Stay tuned. Next week -- same time, same place -- I’ll be back with another “Bargain Bin” pick. Have a great day!
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
