An analyst at Jefferies, Peter Misek believes Hewlett-Packard (NYSE:HPQ) stock is undervalued and recently upgraded the shares, setting a $40 price target. Misek says the current price of the stock makes it: "too cheap and too compelling," and he believes that Hewlett-Packard executives can increase the share buyback because "They can borrow money from the long bond market and buy back a ton of stock."
Hewlett-Packard shares are trading at $32.32. HPQ is a leading technology company with products ranging from computers to printers. The 50-day moving average is $34.98 and the 200-day moving average is $40.51. Earnings estimates for HPQ are just over $5.01 per share in 2011, and $5.36 for 2012. This gives HPQ a super low PE ratio of only 7. HPQ pays a dividend of 48 cents per year, which is equivalent to a 1.5% yield. Here are five reasons to buy Hewlett-Packard stock:
- Famed hedge fund investor John Paulson recently started a new position in HPQ.
- With a PE ratio of only 6, chances are these shares have hit rock bottom and are a solid long-term buy
- HPQ recently announced a goal of $7 per share in earnings by 2014. The CEO set this goal during the HP "Strategy Day" earlier this year.
- These shares were trading over $40 per share not long ago, and could be poised for a rebound soon. Hewlett-Packard is one of the cheapest tech stocks based on PE ratio and other metrics.
- Just a couple of weeks ago Hewlett-Packard announced another stock buyback program for an additional $10 billion. This is in addition to a $10 billion plan authorized about a year ago.
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Disclosure: I am long HPQ.
Disclaimer: Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes only.