Will HP Continue its 2013 Dominance?

A nearly 60% rally year to date hasn’t been of much help to long-term investors in Hewlett-Packard Company (NYSE:HPQ) with the stock still down over 50% from its levels in early 2010, but it has been quite welcome to any who bought the stock recently as HP fights to be one of the top-returning large cap stocks of 2013. Technology hardware business have not done well recently, hitting not only HP but also companies such as Dell Inc. (NASDAQ:DELL); those which made an earlier transition to focus on software and services, which HP is currently in the process of doing, have seen somewhat better fortunes. International Business Machines Corp. (NYSE:IBM) would be one example of this.

The first quarter of Hewlett-Packard Company’s current fiscal year ended in January. While the company reported a 6% decline in revenue compared to the same period in the previous fiscal year, and earnings were down 16%, these respective numbers easily beat analyst expectations; this sent the stock up strongly on the day and of course contributed to the broader rally for the year. HP issued internal guidance centered on $3.50 in earnings per share for the fiscal year, and the Street has essentially adopted that figure as its own target. This makes for a current-year P/E multiple of 7, and even though HP has been declining if it can moderate the decreases in earnings that price is cheap enough that it could be a good value.

Renaissance Technologies, whose founder Jim Simons is now a billionaire, increased its holdings of Hewlett-Packard Company by 12% in Q4 to a total of 4.9 million shares (see Renaissance’s stock picks). Ralph Whitworth’s Relational Investors had HP as one of its five largest holdings at the end of December according to that fund’s 13F filing (find more of Whitworth’s favorite stocks). Yacktman Asset Management, managed by Donald Yacktman, was another major shareholder during the fourth quarter of 2012 maintaining a position of almost 11 million shares. Check out more stocks Yacktman likes.

How does HP compare to its peers?