Buy Hewlett-Packard
For Growth
by Philip Springer
editor, The Retirement Letter
The
sector where earnings are growing most rapidly, both here in the U.S. and
around the world, is technology. So it makes good sense for us to invest
in industry leaders in this segment of the economybut only when your investment
will carry long-term risk.
I
recommend you buy Hewlett-Packard (NYSE HWP) for these four reasons:
(1) its new Internet and electronic-commerce focus; (2) its startup operations,
primarily in software and other technology businesses; (3) its new CEO,
Carleton (Carly) S. Fiorina, who is aggressive and highly regarded in the
industry; and (4) the pending spin-off of its non-computer operations.
Hewlett-Packard
has long been a solid company, although it has struggled in recent years.
The old "HP way" failed to keep pace with the revolution in formation
and communications technology. But now evidence is mounting that HP is getting
back on track. Building on its solid computer and peripherals base, the
company is accelerating its expansion as a supplier to the booming Internet
and e-commerce markets.
The
new focus is already showing results. Earnings growth is quickening, with
a 35% jump in the latest quarter. And economic conditions are improving
overseas, where HP generates half its revenues. My current projection is
for HP to earn $4 a share over the next 12 months, and then to keep growing
at about 15% a year.
What
to do now: Buy Hewlett-Packard
up to $115 for superior long-term growth, as a way to capitalize on technology's
increasingly important role in the world's economy.
Editor's
Note: Philip Springer is editor
of The Retirement Letter, 7811 Montrose Rd., Potomac, MD 20854. Monthly,
1 year, $115.
