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HP, Lowe's and Home Depot Report Next Week: Will the Rally Continue?

NEW YORK (TheStreet) -- At one time Hewlett-Packard (HPQ) was one of my favorite dividend-paying, long-term holds. When the company started playing musical CEO chairs, I bailed with a loss I thought was painful at the time.

Watching HP sink below $20 reaffirmed my belief in stop losses for long-term holds as well as quick trades. Along with HP, we have Dell ( DELL ), one of HP's biggest competitors reporting. Dell's earnings take a back seat to going private, but I include it to add flavor to HP. Along with the computer makers, I'll share my thoughts on the other three I will be watching. Let's see if we can make some money next week.

HPQ ChartHPQ data by YCharts

Hewlett-Packard (HPQ)

Hewlett Packard is one of the leading global providers of computing and imaging solutions and services for business and home. The company is focused on capitalizing on the opportunities of the Internet and the proliferation of electronic services. Its major businesses include Imaging and Printing Systems, Computing Systems and Information Technology Services.

52-Week Range: $11.35 to $27.78

Price To Book: 2.2

Wall Street isn't expecting much this quarter. Earnings per share are expected to come in below last year for the same quarter. The earnings release is scheduled after the market closes on Wednesday.

The consensus estimate is currently 87 cents a share, a decline of 13 cents (13%) from $1 during the corresponding period last year. Analysts' estimates this quarter range from 78 cents, to a high of 93 cents per share.

In comparison, Dell is expected to produce 24 cents a share, backsliding 26 cents (52%) from 50 cents during the matching period in the previous year. Analysts' estimates this quarter for Dell range from 21 cents, to a high of 28 cents per share.

Analyst opinion is mixed with this company. Most of the analysts surveyed don't believe a buy or a sell is currently warranted. Right now, HP has 7 buy recommendations out of 33 analysts covering the company, 19 holds, and 7 recommend selling. As much as I would like to get long HP again, I'm not ready to move on it yet. What I really want to see is another pullback in price like the one we had in April.

So far 2013 is blowing most expectations away, and the trend is solidly bullish, and last year's dividend hike is likely to get repeated soon. HP's one-year return beats Dell's even after the buyout fight. The dividend payout ratio is small enough for HP to allow the board to raise the dividend, retire more debt, and or shrink the float.

After Cisco Systems (CSCO) disappointed investors on Thursday, causing shares to dive over 7% lower as of Thursday's close, HP's upward momentum lost steam. If HP doesn't at least match last quarter's 87 cents in earnings, a retest of $24 is likely.

If HP does beat, and I think it will beat by at least 3 cents, it may still not be enough to propel shares higher because expectations are lower than last year. Basically, look for anything over 95 cents as the tipping point to carry shares higher. Analysts are calling for a price target of $24.83, so we can also expect rising analyst targets if HP delivers.

HP's dividend is modestly attractive at 58 cents a year for a yield of 2.1%. Short sellers aren't touching it, and only 2.3% of the float is shorted. This is comparable with Dell's 2.3% short interest.

HPQ Revenue Quarterly ChartHPQ Revenue Quarterly data by YCharts

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