The Tech space is in correction territory owing to the hinted rise in interest rates from near zero as soon as March after bond-purchase tapering ends. However, the computer hardware industry is expected to witness rising demand this year, with companies rearranging their operations to continue working remotely.
Moreover, in this digital era, the use of the internet of things (IoT), artificial intelligence (AI), and cloud-based products and services is expected to keep increasing, which will lead to the growing need for computer hardware. According to Globe Newswire, the global computer hardware market is expected to grow at a CAGR of 6% by 2025.
So, it could be wise to bet on quality computer hardware stocks Dell Technologies Inc. (DELL) and HP Inc. (HPQ), which are currently trading below their 52-week highs but have solid rebound potential.
Dell Technologies Inc. (DELL)
One of the world’s leading technology companies, DELL designs, develops, manufactures, markets, sells, and supports Information technology solutions, products, and services worldwide. It operates through two segments: Client Solutions and Enterprise Solutions Group. The company has a collaboration with Owl Cyber Defense Solutions, LLC.
On January 19, 2022, DELL introduced multi-cloud capabilities that offer a consistent experience wherever applications and data reside. The company also expands support for developer operations with new offers and resources to help choose the right cloud environment combined with the security, support, and predictable cost of Dell infrastructure. This could lead to increasing demand for its solution.
DELL’s revenues increased 21% year-over-year to $28.39 billion for the fiscal third quarter ended September 30, 2021. The company’s adjusted EBITDA grew 6% year-over-year to $3.41 billion, while its non-GAAP net income came in at $2.02 billion representing an 18% year-over-year increase. Also, its non-GAAP EPS came in at $2.37, up 17% year-over-year.
For fiscal 2022, analysts expect DELL’s EPS and revenue to increase 3.6% and 11.2% year-over-year to $8.29 and $104.96 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. The stock has gained 43.6% over the past year to close yesterday’s trading session at $55.34. It is currently trading 11.2% below its 52-week high of $39.65, which it hit on January 12, 2022.
DELL’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Value and a B grade for Sentiment. DELL is ranked #10 out of 48 stocks within the Technology - Hardware industry. To see DELL’s ratings for Momentum, Growth, Stability, and Quality, click here.
HP Inc. (HPQ)
HPQ provides personal computing and other access devices and provides imaging and printing products and other related technologies, solutions, and services internationally. The company operates through three segments: Personal Systems; Printing; and Corporate Investments.
On January 4, 2022, HPQ unveiled new devices and solutions designed to enhance collaboration and creation experiences so people can work and create wherever they are. This could lead to increased demand owing to the rising adoption of hybrid working across the globe.
HPQ’s net revenue increased 9.3% year-over-year to $16.70 billion for the fourth quarter ended October 31, 2021. Its net cash provided by operating activities grew 52% year-over-year to $2.80 billion, while its non-GAAP net earnings came in at $1.10 billion, up 29% year-over-year. The company’s EPS increased 52% year-over-year to $0.94.
Analysts expect HPQ’s EPS to increase 10.8% year-over-year to $1.03 for the quarter ending April 30, 2021. It surpassed the consensus EPS estimates in each of the trailing four quarters. Its annual revenue is expected to be $65.56 billion in fiscal 2022, representing a 3.3% year-over-year rise. The stock has soared 43.1% over the past year to close yesterday’s trading session at $35.23. It is currently trading 9% below its 52-week high of $60.81, which it hit on January 18, 2022.
HPQ’s POWR Ratings reflect its solid prospects. The company has an overall rating of B, which translates to Buy in our proprietary ratings system. It has an A grade for Value and a B grade for Quality.
Click here to see the additional POWR Ratings for HPQ (Growth, Stability, Sentiment, and Momentum). It is ranked #11 in the same industry.
DELL shares fell $0.01 (-0.02%) in after-hours trading Thursday. Year-to-date, DELL has declined -1.28%, versus a -9.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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