Companies in the tech space have been the largest beneficiaries of the coronavirus pandemic and their stocks have been on a solid run since the market slump in March last year. The demand for tech products and services is growing and companies are increasing their tech budgets for digital transformations. However, there are certain technology stocks that have not performed as expected…
Meanwhile, talk is increasing around new federal laws to limit unhealthy business practices by big tech companies. This, coupled with the rising hopes for a quick economic recovery, is driving a big shift in investments from expensive growth stocks to quality value stocks. After all, the essential nature of technology has made tech stocks the “new defensive plays.”
We think this year could see more IT spending on digital infrastructure to make remote work more efficient and accessible. Hence, it could be wise for investors to pick undervalued stocks HP Inc. (HPQ – Get Rating), Lenovo Group Limited (LNVGY – Get Rating), LG Display Co, Ltd (LPL – Get Rating) and Synnex Corporation (SNX – Get Rating) before the market begins to recognize their value.
HP Inc. (HPQ – Get Rating)
HPQ delivers personal computing, workstations, thin clients, tablets, imaging and printing products, and related technologies, solutions and services for the commercial and consumer markets in the United States and internationally. The company operates in three segments – personal systems, printing, and corporate investments.
HPQ recently entered a definitive agreement to acquire HyperX, the gaming division of Kingston Technology Company, in a $425 million buyout. The acquisition supports HPQ’s strategy of driving growth in its personal systems business, where gaming and peripherals are attractive segments. HyperX’s product portfolio spans a range of gaming peripherals, including headsets, keyboards, mice, mouse pads, USB microphones, and console accessories.
HPQ reported net revenue of $15.6 billion in its fiscal first quarter, ended January 31, 2021. This represents a 7% increase year-over-year, driven by a 34% jump in consumer devices in the personal systems category. The company shipped more than 18 million units during the quarter. Its total units sold climbed 15% from the year-ago quarter. In fact, notebooks registered a 33% jump, while desktop units declined 23% year over year. Its adjusted EPS came in at $0.92, rising 41.5% from the year-ago value of $0.65.
HPQ has witnessed solid demand for personal systems since the onset of the pandemic last year, on the back of wider adoption of remote-working and online-learning structures . The company is also benefiting immensely from its cloud-based print services and solutions. However, HPQ still faces industry-wide component supply constraints, which are dampening its ability to meet demand. Nevertheless, analysts expect HPQ’s current year revenue and EPS to improve 6.9% and 43%, respectively.
With a year-to-date gain of 22.2%, HPQ closed yesterday’s trading session at $30.04. The has stock gained more than 50% in the past six months to hit its 52-week high of $30.44 this week. HPQ’s forward p/e ratio currently stands at 9.07x, which is significantly lower than the industry average 26.43x. In terms of its trailing-12-month p/s, the stock is currently trading at 0.70x, 84.1% lower than the industry average 4.43x.
HPQ’s POWR Ratings are consistent with this promising outlook. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
HPQ has an A grade for Value, and B for Momentum and Sentiment. The stock is currently ranked #1 in the 50-stock B-rated Technology – Hardware Industry.
In total, we rate HPQ on eight different levels. Beyond what we stated above, we have also given HPQ grades for Growth, Stability and Quality. Get all HPQ’s ratings here.
Lenovo Group Limited (LNVGY – Get Rating)
LNVGY is an investment holding company that develops, manufactures, and markets technology products and services. The company provides laptops, desktops, tablet PCs, accessories, and data center equipment, as well as IT services. As a global company, LNVGY operates in 180 markets and with more than 30 manufacturing sites around the world.
LNVGY recently announced its plan to…
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