Hewlett-Packard Company is an American multinational information technology corporation headquartered in Palo Alto, California, USA. HP is one of the world's largest information technology companies and operates in nearly every country. HP specializes in developing and manufacturing computing, data storage, and networking hardware, designing software and delivering services… read more from Wikipedia.
5 year Chart of HPQ (Click on image to enlarge)
I believe most of you know about the sex scandal revolving Mark Hurd, the CEO of HP during early August which sent the price from $54.75 (52 wk high) down to the current price of $39.19 (around 52 wk low). Down by around 28%. Soon after that, he stepped down as CEO.
The news that brought the price down to its lowest this year after the 2008 financial crisis is actually short-term news. And short-term news is a good buying opportunity as we know that the news will not affect the company in long-term. Read here to learn how to differentiate long-term and short-term news
Fundamental Analysis
Honestly speaking, you don’t really have to bother much about fundamental analysis in the case of trading on short-term news. But it doesn’t kill to know a little?
I am using HP Probook right now and I am very happy with it. Its fast, don’t weigh a ton and the customer service is quite decent. Many of us know or at least heard about the brand, HP. This clearly shows that HP has a strong brand recognition.
This company also has been consistent in their dividend payout. Also, HP posted an 11% revenue jump and a 6% profit increase for its fiscal third quarter. The PE ratio of HP is now 10.91 which tentatively mean it is undervalued. And the ROE is 20.54%, which is considered attractive (more than 15%).
Technical Analysis
2 month Chart of HPQ
From the chart, you can spot multiple buy signals indicated by the yellow circles. The price fell after the resignation of Mark Hurd and touched the support line on 27 August. I believe the price is going to head back to the resistance line and that’s your sell signal before plunging down again. And then, I speculate there is a possibility that the price might break below the support.
Conclusion
I would say HP is a good buy at the moment. Sell it once it hits the profit target of around 42 (resistance line). I don’t recommend you short sell it along the way down. But once it breaks the support line, another good buying opportunity emerges.
From the fundamental, you can also buy and hold it for long term. There is a high possibility that HP will eventually go back to their high.
Disclaimer
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