Adobe Systems Incorporated (ADBE), Hewlett-Packard Company (HPQ): A Tech Stock to Buy and 2 to Watch As Price Targets Upgraded

3) Hewlett-Packard Company (NYSE:HPQ)

The doubling in Hewlett-Packard Company (NYSE:HPQ) shares is surprising all investors. Hewlett-Packard Company (NYSE:HPQ) is now up 107% from its 52-week low reached in late-November 2012. The company continues to benefit from renewed interest in server hardware suppliers. IDC said that server sales improved in the fourth quarter, increasing by 3.1%. The company plans to reduce head count by 15,000, which will improve Hewlett-Packard Company (NYSE:HPQ)’s return on equity.

Hewlett-Packard Company (NYSE:HPQ) increased its quarterly dividend payout by 10%. Shares now yield $0.58 per share and yield 2.51%.

Bottom Line

The easy money was made in shares of Adobe Systems Incorporated (NASDAQ:ADBE). The software improved its steady sources of revenue, but at a forward P/E of 44, leaves no room for disappointment. Investors should pass on Adobe Systems Incorporated (NASDAQ:ADBE).

Red Hat shares are correcting sharply to the downside, but investors should wait for the sell-off to end before starting a position in the company. Big Data, virtualization, and hybrid clouds may face moderate growth this quarter, but the long-term growth trend is positive. Analysts believe Red Hat offers 29% upside.

The low valuation in HP is helping the recovery story for the giant PC maker. HP is valued at only 6 times the forward P/E. Investors who bought shares in the teens could ignore any near-term profit taking. The recovery time frame for Hewlett-Packard Company (NYSE:HPQ) is several years, not several quarters. This means that as its business takes the required time to turn around, investors may ignore the fluctuation while getting compensated with a dividend a 2.51% in the interim.

The article Adobe Systems Incorporated (ADBE), Hewlett-Packard Company (HPQ): A Tech Stock to Buy and 2 to Watch As Price Targets Upgraded originally appeared on Fool.com and is written by Chris Lau.

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