Hewlett-Packard Has Value, but Poor Sentiment

NEW YORK (TheStreet) -- It's hard for me not to get the itchy trigger finger and press the buy button whenever I see stocks that are trading at exceptionally low valuations. That convulsion is even more noticeable when it is a technology company.

But it begs the question, if the valuation is perceived to be low, why hasn't anyone else noticed? That seems to be the weird aspect of investing -- everyone wants value, but they refuse to buy until everyone else does.

That seems to be especially true these days with tech giant Hewlett-Packard (HPQ). But it won't be for long.

'Sentiment' Does Not Dictate 'Value'

For many, the thinking is, since the market is presumed to be always right, why bother on a stock that everyone ignores. However, investors don't often realize that they are making the mistake of confusing "market sentiment" with "value" -- two entirely separate terms.

Although the stock has not been a high-flyer in recent years, the HP is now taking steps not only to shore up its position against rivals such as Dell (DELL) and Cisco (CSCO), but also possibly to steal some market share away from Apple (AAPL).

With the help of its longtime partner Microsoft (MSFT), with which it shares a mutual enemy in Apple, the company is betting heavily on the success the Windows 8 launch as a way to dispel exaggerated notions of PC death.

What's more, the company is now in the midst of a cost-cutting strategy that should save it an estimated $3 billion over the next several years.

It will do this by opting to consolidate both its printing and PC businesses which combined have accounted for $65 billing of the company's revenue last year. In addition to reducing its capex, this is certain to make the company more nimble while improving its ability to innovate and produce products that appeals to consumers.

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