Buy PC Suppliers as They Go On Sale Again - HPQ, DELL

When Dell (NYSE:DELL) and HP Inc. (NYSE:HPQ) reported quarterly results, shares slumped. The strong results are no reason to get rid of shares. Investors seeking value should consider both firms now that the stock is on sale again.

Dell posted revenue growing by 15% to $26. 13 billion. It earned $2.24 a share. The notebook and PC segment, through Dell’s client solutions group, increased sales by 27% to $14.3 billion. Investors are concerned that consumer sales decelerated to 17%. In the first quarter, sales grew by 42%.

Demand for computers will moderate now that the pandemic-driving PC buying is over. The upgrade cycle is coming to an end, so DELL stock is on sale.

HP posted earnings of 92 cents a share. Revenue grew by 7% to $15.3 billion. The adjusted operating margin was 9.81%. For the full year of 2021, GAAP EPS will be $3.56 to $3.62. HPQ stock trades at a forward price-to-earnings at below 8 times. Investors also get a modest dividend that yields around 2.5%.

HP is trading at too deep a value for investors seeking a bargain to ignore. People still need to upgrade their computers regardless of a lockdown catalyst emerging or not.

At these levels, both HP and DELL stock is worth another look.