Downside Risks to Hewlett-Packard Company (HPQ), Intel Corporation (INTC) Overwhelm Value Story

Thus, while the company has been on the decline from the eroding PC business, it still has considerable cash flow necessary, in my view, to make a successful foray into more popular business segments. The partnership with Microsoft, another cash-rich company, positions it to make a major upset for many bears.

Conclusion

Intel Corporation (NASDAQ:INTC) and Hewlett-Packard Company (NYSE:HPQ) look incredibly cheap at a respective 10.2x and 4.8x forward earnings. With so much of the market focused on the downside, it’s hard not to buy on the prospects of a surprise positive beat. However, it’s also important to bear in mind the risks. If you are looking for a company with considerably lower risks that could still jump from weakening PC concerns, I recommend Microsoft. The producer is incredibly cheap at 8.9x forward earnings and offers a strong dividend yield of 3.3%. At the same time, free cash flow is stable and yields 8.8%. Despite all of the clamor, the company actually grew by a rate of 7% on the bottom-line over the past five years. Plus, it is 6% less volatile than the broader market.

The article Downside Risks to HP, Intel Overwhelm Value Story originally appeared on Fool.com and is written by David Gould.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.