After seeing the market, and especially the crowded momentum stocks, get eviscerated last week, investors may be looking to shift away from those stocks to solid growth companies. Add in companies that have potential catalysts that can change investors’ negative sentiment and push the stock higher.
A new research note from Jefferies lists seven stocks that could have meaningful events happen in a reasonably short time. The stocks in some cases have sold off significantly, and the analysts view fundamental downside as limited. We screened the list and found four that look very timely.
This old-school tech stock has been sold off all year as investors feel that the slowdown in personal computer (PC) sales could continue to hurt earnings. Hewlett-Packard Co. (NYSE: HPQ) stock is down a whopping 25% year to date and trades at a very low 8.2 times 2015 estimated earnings. Some Wall Street analysts feel that weak PC demand could continue to negatively impact revenue and free cash flow at the company. The company again posted so-so earnings last week. Profits declined 13% in the quarter, further promoting a company split in order to reduce costs. HP’s net income dwindled to $900 million, from $1 billion in the same quarter last year. Total sales for the company decreased 8% to $25.3 billion from last year.
The company is focused on splitting into two entities, a move that the Jefferies analysts feel will be a very positive catalyst for the company. One company, to be named Hewlett Packard Enterprise, will focus on selling technology like servers and data center gear to businesses. The other, to be called HP, will sell printers and personal computers. The Jefferies team feels that the company has the least downside risk of those featured in the report.
HP investors are paid a 2.56% dividend. Jefferies has a very solid $40.50 price target for the stock. The Thomson/First Call consensus target is $37.80. Shares closed Friday at $27.47.