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Hewlett-Packard: A contrarian pick


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by Chuck Carlson, editor DRIP Investor

Buying low oftentimes means buying stocks that are way, way, way out of favor. However, such a contrarian position can pay off for patient investments. One such contrarian play that particularly interests me is Hewlett-Packard (HPQ).

Yes, Hewlett-Packard certainly has its problems. But the stock seems to be reflecting these problems.

Indeed, Hewlett-Packard remains among the worst-performing stocks in the Dow Industrials over the last year and has been a real sluggard for the last couple of years.

However, the company still generates plenty of cash flow, and cost cuttings and streamlining should enhance that cash flow. The stock yields well over 2%, so investors get paid while they wait for a rebound.

To be sure, I’m not necessarily expecting a big price jump this year. But I think over the next 18-24 months, Hewlett-Packard stock could rise 25% or more. I think the stock represents an intriguing turnaround play in the tech sector.

Hewlett-Packard offers a traditional DRIP whereby an investor must own Hewlett-Packard stock – and have the stock registered in his or her own name – in order to enroll in the plan.

Learn more about this financial newsletter at Chuck Carlson's DRIP Investor.

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