HPQ dip buy after triangle breakout
Updated
HPQ recently broke out of a triangle to the upside. Analyst sentiment is bullish, with HPQ earning an 8.9/10 Equity Starmine Summary Score. Short-dated options positioning on HPQ are extremely bullish-- more bullish than any other security I've recently looked at. The news environment has been relatively positive, with a new suite of remote work product offerings offsetting fears of weak PC demand in the back half of the year. Recent analyst earnings revisions have been in an upward direction. Recent signs of recovery for industrials and manufacturing should bode well for HPQ's 3-D printing business.
Plus, HP looks cheap. Admittedly its forward PEG ratio at 8 is a little high, but that's offset by a really low PSG ratio of 0.38 and a 4% dividend yield. In forward P/E and forward P/S terms, HPQ is at the absolute rock bottom of its 3-year valuation range. To get this high a dividend yield on a technology company with consistent earnings and sales growth is really rare. HP ranks fourth in the list of companies with the most 3-D printing patents, so I think it holds a leadership position in a promising emerging technology space. (The industry's growth has honestly been a little disappointing to date, but more patents are being filed every year, and eventually I think we hit a tipping point where the technology becomes cheap enough and viable enough to really blow up.)
Plus, HP looks cheap. Admittedly its forward PEG ratio at 8 is a little high, but that's offset by a really low PSG ratio of 0.38 and a 4% dividend yield. In forward P/E and forward P/S terms, HPQ is at the absolute rock bottom of its 3-year valuation range. To get this high a dividend yield on a technology company with consistent earnings and sales growth is really rare. HP ranks fourth in the list of companies with the most 3-D printing patents, so I think it holds a leadership position in a promising emerging technology space. (The industry's growth has honestly been a little disappointing to date, but more patents are being filed every year, and eventually I think we hit a tipping point where the technology becomes cheap enough and viable enough to really blow up.)
Trade active
Here's the buy point: HPQ pulled back sharply today to both volume and trend line support after June durable goods orders for the PC segment disappointed. I will play HP for a trend line bounce, with a stop loss below the trend line.Note
HPQ continues to march higher. Today the company beat both earnings and sales forecasts and reported 4Q guidance above the Street view, and is up over 2.5% after hours. HPQ remains about 13% undervalued, by my calculation.Note
Every time HPQ enters my buy zone near the trend line, it bounces out before I can even take a look at the chart. That tells me there's likely a large institutional buyer who's buying this trend line too. 
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