Cheap Tech Stocks: Hewlett-Packard
Hewlett-Packard (HPQ) doubled in 2013, so you may not think it’s one of the cheap tech stocks. However, even after this huge run HPQ still has a forward price-to-earnings ratio of less than 8.
Furthermore, HP sports over $12.1 billion in cash on the books. When you back out the cash, the P/E falls to about 6. That’s crazy cheap!
And despite volatility in recent years, HP is a rock-solid company with operating cash flow topping $11.6 billion in fiscal 2013. HPQ stock pays a nice 2% dividend and has tons of headroom to increase those payouts going forward. And considering the distributions have almost doubled in the past 10 years, it’s clear that dividend growth is a big part of the company’s mission.
Sure, HPQ has had trouble growing revenue in a post-PC age. And there is a risk that some of the turnaround has been priced in after the 2013 run-up.
But HPQ stock is showing signs of a transition to more software and enterprise sales that hold potential. On top of that, it’s still a cheap tech stock based on forward earnings, and the dividend is bulletproof so you will have a good foundation even if shares do drift sideways for the short-term.
As of this writing, Jeff Reeves did not hold a position in any of the aforementioned securities.