In the tech space, many moves are cyclical. A new trend pops up, then dies out, only to pick back up again in the future. Investors can do well with these trends, provided they buy at the right point, make a quick profit, and then look for the next cycle ready to move.
In the tech space, the personal computer (PC) market has been out of favor. It last surged at the start of the pandemic. But thanks to the increase in AI usage, it may see a surge next year.
That trend won’t be huge compared to the overall AI trend. But for the few PC manufacturers, it could been a great 2024. That’s why analysts see opportunity in companies like HP (HPQ).
2023 has been a quiet year for HP. Shares are up about 2 percent. Revenues are off about 6 percent. And the market doesn’t expect much, as it’s valuing shares at less than 9 times earnings and about half its price-to-sales.
Action to take: Shares look like an undervalued play in the tech space, and rising PC sales could lead to a big return in shares relative to the overall market. HP also pays a 3.7 percent dividend at current prices.
For traders, shares are trending higher and may have more room to run in the months ahead. The May 2024 $32 33 calls, last going for about $0.92, could see high double-digit returns or better before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.