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HP: Impressive, But Can It Last?

Apr. 04, 2022 4:27 AM ETHP Inc. (HPQ) Stock21 Comments


  • HP has seen a real profit explosion since the outbreak of the pandemic.
  • The company guides for further earnings growth, but risks appear to be emerging to the guidance.
  • While valuations are dirt cheap, I recognize market skepticism and concerns to the 2022 guidance, leaving me on the sides here.
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HP Inc Announces It Will Cut 9,000 Jobs Over 3 Years In Restructuring Plan

Justin Sullivan/Getty Images News

Shares of Hewlett-Packard (NYSE:HPQ) have really come to life in a post-pandemic move. Shares were stagnant at around the $20 mark for quite a while; shares were initially hit hard by the pandemic, but as shares rallied in a convincing

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Comments (21)

Looks like being on the sidelines was the WRONG plan! This company has pricing power and minimal LTD and great cash flow. It was a steal! Too much over thinking on this one by so many. This was not fools gold! And what debt? They could pay off all their LTD with net income in less than a year and with cash in two! That’s outstanding!!
FaultyR0M profile picture
@benet1800 It hasn't even been 24 hours yet and obviously it popped because of Buffet but unless you are day trading it's way too early to pat yourself on the back on this one. I would wait for earnings to see how are things with components, materials inflation and if demand is not waning after very strong 2 years. Besides, I fully expect this strong run to fade over coming days.
@FaultyR0M and it is indeed fading. Balance sheet is really strong but to me, this stock is about buying the past (strong balance sheet). I am not sure about the future of this company so I stay out.
Mario Silva profile picture
@benet1800 Could you explain us what is the pricing power of this company? since there are other important competitors in the same industry.
The company is a mess and the stock is a dog. I don’t see how the stock is attractive.
Seeking Wisdom profile picture
@Tippsology This didn't age well
@Tippsology Warren Buffett bought. oddly
@Seeking Wisdom huh? I just posted my comment tonight. Yes, after the Berkshire position news.
Willow Street Investments profile picture
Berkshire buys 10% stake in HPQ:

FaultyR0M profile picture
I agree with the author. On one hand it's really cheap, profitable equity that pays good dividend. Plus HP has plausible growth avenues. I think Poly acquisition makes sense, I like their recent Hyperx acquisition (gaming peripherals) and I think their 3d printing segment could be huge if they can execute well.

On the other hand, its cyclical equity selling essentially commodity products (with razor thin net margins). Printing is really money making segment for HP but printing is in secular decline. Plus it is likely we will have recession soon and I think people will be more concerned about paying their rent / mortgage than upgrading their 3 years old PC that works just fine.

For now I hold, but I will be adding in mid to high 20s. There is also Dell that is even cheaper but I think HP is much better company (and Mr. Dell is proven value destroyer) so I only hold HP.
GR Value profile picture
@FaultyR0M Entry level for computers is practically nil. You have "ibuypower" for example out of nowhere making competitive more value computers. Not to mention HP doesn't even make a whole lot of good stuff, they make mostly laptops and the future is all about portable phones + desktops and VR.

The worst part of it all is they owe $10 net tangible on books. And they are gambling on margins not falling and taxes staying at 14% forever. I would think $25 is generous enough. I wouldn't even think of wasting my time over $35. That's ridiculous.
Willow Street Investments profile picture
Not a big fan of increasing debt but will have to presume management knows its limits...also they can stop buybacks at anytime and start paying down debt.
@Willow Street Investments MM theory, the 2nd version, shows adding some debt can be good (when considering tax benefits etc.) up to the point of not increasing chance of bankruptcy, which HP is far from still..dont know why more tech companies dont take on more debt,
Willow Street Investments profile picture
Go hpq!
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