Is HP stock a better pick right now?

Shares of HP Inc (NYSE: HPQ) were down 0.35% or -$0.19 in the latest trading session and are up 2.77% for the year-to-date period. The stock’s performance over the last year, however, has been 14.34% higher. Contrastingly, the stock has gained 2.77% YTD, and over the last three months alone has gained 31.48%. If we look at the shorter-term, its performance was down -1.37% over the week and down 5.29% over the month.

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With a price to earnings ratio of about 12.5%, it’s tempting to invest in stocks with a 3% dividend yield. However, HP expects to see only moderate sales growth at this time since its core products are already mature and aren’t exhibiting the robust growth rates of previous periods. 

The PC market is also traditionally competitive, with numerous competitors who constantly present alternative design solutions and software integrations. With the digital transformation of the printing industry, which results in less demand for printers, HP is under pressure in the printing solutions marketplace.

As a result of this, HP’s revenues dropped 4% y-o-y in 2020. However, HP stock rose as a result, as this decline was milder than expected. HP invests in new technologies to maintain its growth, including 3D printing. Despite this, however, there has been little sustained growth in computer sales, contributing 69% of total sales. 

There are competition and technological threats that may threaten the company’s profitability down the road. This is especially true since 5G networks will allow even more computing tasks to be moved to cloud storage. Long-term investment in HP Inc (NYSE: HPQ) is therefore now at greater risk.

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