Investing these days is anything but simple. Most people will agree that the market will recover at some point, but when and to what extent no one can truly answer right now. In my mind, if one is going long, there two things to consider, and they can be conflicting if one is not careful. The first is, how will it navigate the current pandemic, not only in terms of current sales, but if it will be harmed by structural changes that last long after the pandemic has ended. The other is our normal criteria when we buy a stock; assuming the pandemic did not exist, would we still find it attractive. The latter will gain significance as things subside, and for anyone going long, may be the worthier argument.
There are a few stocks I really like at this time, although I would never try to guess when they will recover, because I am not sure anyone knows that right now. I'm actually pretty sure no one does. Hewlett-Packard Enterprise(NYSE:HPE) is one such stock, and is the subject of this article.
We will start with the fundamentals of the company, while also looking into short-terms problems and opportunities offered by COVID-19.
One of the complaints about the company is it has not seen revenue growth, and in fact has seen some degree of regression. The company has been able to increase earnings per share, however, but this is largely due to stock repurchasing. If we look at the first quarter, it's instructive to realize that although revenue was down 7% year-to-year, if we look closer, we see a lot of positive trends.
First, the revenue loss was largely in their Compute segment, which saw a 15% reduction in revenue. However, there are two major reasons for this, the first being the COVID-19 impacted their component
