NEW BULLISH Plays
Hewlett-Packard Co. - HPQ - close: 35.15 change: +0.63
Stop Loss: 33.20
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Listed on July 19, 2014
Entry on July -- at $---.--
Time Frame: 8 to 12 weeks
Average Daily Volume = 8.9 million
New Positions: Yes, see below
Why We Like It:
Hewlett-Packard was famously started by two Stanford University students back in 1939 in a rented garage. The business that started inside a one-car garage has grown into a massive $65 billion company. Today the company makes printers, personal computers, software, IT services and infrastructure.
It has been a good year for old school technology companies. Microsoft (MSFT) is up +19.8% this year. Intel (INTC) is up +31.2%. HPQ is currently up +23.3%. All three of them are outperforming the major U.S. indices. What's also noteworthy is that all three appear to be benefitting from MSFT's decision to discontinue technical support for its Windows XP operating system.
In April this year Microsoft announced they would stop providing support for XP after 13 years. Instead of upgrading their software the data suggests that many consumers and business have chosen to upgrade their entire computer. Why is that significant? As of April over 25% of computers connected to the Internet were still using XP.
This upgrade cycle was definitely a boon for Intel (INTC). INTC recently reported significantly better than expected earnings and a lot of that was due to stronger PC sales, especially from business clients. This same story will probably be bullish for HPQ as well.
Shares of HPQ have been slowly marching higher and currently sit at two and a half year highs. The stock looks poised to breakout past its mid-June peak. Today's high was $35.29. We are suggesting a trigger to open bullish positions at $35.35.
The Point & Figure chart is forecasting a long-term target of $47.00. We probably won't hold on to HPQ that long since the company is scheduled to report earnings on August 20th.
Trigger @ $35.35
- Suggested Positions -
Buy HPQ stock @ (the trigger)
- or -
Buy the Sep $35 call (HPQ140920C35) current ask $1.53
Option Format: symbol-year-month-day-call-strike