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Go on the Defensive: Microsoft, Oracle, HP

BOSTON ( TheStreet) -- Large-cap technology stocks are trading at cheap prices. Investors seeking growth with a margin of safety should consider the following companies.

Hewlett-Packard (HPQ - Get Report) makes computer hardware and offers consulting services worldwide. Since 2007, it has increased revenue 7.4% annually, on average, and boosted earnings per share 16% a year. Its stock has remained flat over that period.

Quarter: Fiscal second-quarter profit increased 28% to $2.2 billion, or 91 cents a share, as revenue grew 13%. The operating margin inched up from 9% to 10%. Hewlett-Packard has $14 billion of cash and $18 billion of debt, equal to a debt-to-equity ratio of 0.4.

Stock: Hewlett-Packard has advanced 22% in the past year, beating indices. Its PEG ratio, a measure of value relative to growth, of 0.3 reflects a 70% discount to estimated fair value. Its price-to-projected-earnings ratio of 9.1 is 44% below the peer average.

Consensus: Of analysts covering Hewlett-Packard, 28, or 80%, advise purchasing its shares and seven recommend holding them. Citigroup (C) offers a target of $65, leaving a potential return of 42%. Goldman Sachs (GS) predicts the stock will hit $62.50.
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