Hewlett-Packard Company (HPQ)

marc64 (99.06) Submitted: 4/28/08 3:12 PM : Start Price: $47.69 HPQ Score: 0.67

HP's PEG is very strong, which many foolish green thumbs agree means HPQs a good value. Revenues are increasing, costs trending down, gross and net are higher, market share is increasing, and company guidance is up for 2008.

Among its peers, HP has revenue growth second only to Apple. HP's sales are 4-times Apple, but its net is less than 2x Apple's. IBM and Dell have better P/E.

The stats confirm what we may already have seen for ourselves, HP is pumping out tons of hardware because the quality/price ratio has made it a compelling choice for purchasers both at home, and in business.

I think the market for computers gets better before it eventually gets worse, so this is a short-term trade betting on irrational consumer exuberance as the Fed's actions spur a wealth-effect spending spree, and $600 stimulus checks end up as a gleaming new computer.

Long term, the real story here is that internationally HP is going very strong, and that could turn HP into a global computing brand name of epic size and market influence. Competition in computer hardware has made the computing sector a death valley, but HP has played and won, lately.

Unfortunately, in order to sell in developing markets, they will have to cut prices, so they may have already skimmed the cream.

On the other hand, once established as a broad-based global computing leader, economies of scale, cheap labor, and global pricing and currency arbitrage advantages could accelerate profitability. Stock valuations will surely follow.

If HPQ survives through the summer, I may keep it. Otherwise, I am betting on a few points based on strong value.

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