This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

HP: Whitman Continues to Prove Why She Was the Right Hire

Stocks in this article: HP MSFT INTC

It is refreshing that Meg Whitman seems to know exactly what ails the company and more importantly, she seems to know what it will take to get the problems fixed. While listening to the call, it was evident that she has placed her stamp on the company and appears to be more dedicated than her predecessor on improving HP's existing businesses. This as opposed to what had become the norm of concealing fundamentally flawed areas of the company's operation.

Bullish Case

One thing HP has done is combining both its PC and printing divisions and confirming it will begin eliminating 27,000 jobs in a cost-saving measure of as much as $3 billion to $3.5 billion by 2014.

As unsettling, if not dire, as things once looked for HP -- particularly with the rise and dominance of Apple coupled with the constant reminders of the death of the PC -- investors have to now be pleased to see the light at the end of the tunnel.

The word "stability" has never been a term that anyone could have used with a straight face to describe HP, especially considering the revolving door that has been the CEO chair over the past five years. However, there is now reason to suspect that the company deserves a chance to prove its worth in any portfolio -- particularly those looking for value.

Another reason to be bullish HP is the fact that the company is due to release its new line of Ultrabook machines in partnership with Intel (INTC) and based on Microsoft's (MSFT) Windows 8 platform. These are thin, light and powerful laptops that are not that far from Apple's popular MacBook Air.

HP is betting heavily on the success of this launch as a way to secure some market share from Apple and dispel notions of PC deaths. It is also hoping that Microsoft's release of Windows 8 generates an increase in sales of not only the Ultrabooks, but also its PCs and its TouchPad tablet, which it recently decided not to scrap.

Bottom Line

While it is still too early to proclaim the resurgence of HP, it is clear it has the management structure in place to get it to where it needs to go. As a longtime apologist for the company, I feel a sense of vindication. However, the more promising aspect is to see that the company has become ambitious and is executing toward its goals.

From an investment standpoint, there is no reason to not expect 20% upside in the near term. With a P/E of 8, the stock trades at a huge discount to its future potential and a price of $40 is not entirely out of the question over the next 24 to 36 months. That said, a couple more quarters like this, it may come sooner than we think.

At the time of publication, the author was long CSCO, AAPL, MSFT and HP.
2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs