Trade of the Day: HPQ Stock Could be a Bottom Fisher’s Dream

by Sam Collins | June 19, 2015 1:07 am

Hewlett-Packard Company (HPQ[1]) — This leading maker of computers, printers and servers has a large service and support network.

On May 21, Hewlett-Packard reported fiscal second-quarter earnings of $0.87 per share, beating the consensus estimate by a penny. However, revenue of $25.5 billion fell slightly short of expectations due mostly to foreign currency effects and weather-related issues. But analysts are confident that cost-cutting will bring positive returns.

S&P Capital IQ forecasts earnings will increase 39% to $3.63 in fiscal 2015 (ending in October) and another 5% in FY 2016 to $3.80. Its analysts rate HPQ stock a “strong buy” with a price objective of $42.

Credit Suisse recently reiterated its “outperform” rating and $45 target. The analyst covering the company expects the business to become increasingly stable and sees HPQ stock as a compelling value.

This bottom fishers’ stock is trading at less than half of its industry average P/E.

Technically, HPQ stock is still in a downtrend, but it is challenging its 50-day moving average at $33.08 and appears to have formed a double-bottom at $31.25. Buying volume is exceeding selling volume, and a close above the 50-day moving average would also result in a penetration of a major downtrend line.

Buy HPQ stock at the market with a stop-loss order at $30. Another way to approach this stock would be to enter a buy-stop order at the breakout at $33.

The trading target for HPQ stock is $38, and my long-term target is in line with analysts’ targets of $42 to $45.

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Source URL: https://investorplace.com/2015/06/hewlett-packard-company-hpq-stock-trade-of-the-day/

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