Hewlett-Packard Growing Green

Green is good, not greed is good, as Gordon Gekko once said. There has been a growing interest in being environmentally conscious, and it seems many companies see the benefit of doing what they can to help the cause.

Maybe it's a genuine concern, maybe it's a fear of being made to do it if they don't do it themselves, or it may be the economic benefit they see from being environmentally conscious.

And we aren't just talking about the alternative-energy companies either. There are plenty of other companies out there trying to do their part and take advantage of this theme.

When we think of going green, we think of recycling our bottles, using more fuel-efficient cars, cleaner sources of power, etc. When it comes to the corporate world, it's a bit more subtle. We need to think of all the indirect uses or products that natural resources are components of.

Computers, for example, are made from oil. The plastic casing and other components are all produced from oil. In order to run them, it takes other sources of energy.

With all the technological innovations -- cell phones, computers, flat-panel televisions, etc. -- more and more energy is being consumed to run these devices. That's a lot of energy, and it doesn't even consider the commercial use of computers with their vast networks and the power needed to cool all those systems.

There are a few technology companies that are getting a head start on going green, addressing these issues and taking advantage of other companies' green sensitivity. Hewlett-Packard (HPQ) is one such company, recently introducing a green line of storage products and claims it can reduce cooling costs by 50%.

Hewlett-Packard

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What intrigues us about this is the stock is already displaying positive price action and has been a strong turnaround story. There has been an orderly advance moving higher on expanding volume and declining on contracting volume. The recent market weakness has led to a pullback that is providing an opportunity to establish long positions. We believe the stock has further upside into the mid $50's.

Echelon

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Echelon (ELON) is a "green" stock that helps other companies automate their facilities for energy conservation. Echelon recently signed a contract with McDonald's (MCD) to help it reduce energy costs and improve efficiency.

The stock is now consolidating after having broken out of a large weekly base formation, and is establishing a new uptrend. A pullback toward the $18 level would be a good entry point into the stock.

We like the fact that technology has been doing better, plus its relative strength. We aren't suggesting the only reason these issues are rallying is because of their green ways. It is, however, another reason to own them, and it's a new bullish catalyst for these stocks.