This Feb. 21, 2012, file photo, shows a Hewlett-Packard logo in Frisco, Texas.The Associated Press
Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor provides marketing and data services to Validea.ca and receives compensation. Try it.
HP Inc. (HPQ-N), formerly Hewlett-Packard Company, is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized business and large enterprises.
HPQ has rallied 60 per cent from its Feburary low and is up 25 per cent since late June. It scores 100 out of 100 in both the James O'Shaughnessy- and Joel Greenblatt-inspired investment models.
The company's strong cash flow ($3.43 per share) is one of the criteria favoured by the O'Shaughnessy model. The model also favours HPQ's dividend. This strategy selects the 50 companies from the market leaders group that have the highest dividend yield. HPQ, with a dividend yield of 3.44 per cent, is one of the 50 companies that satisfy this criterion.
The Greenblatt-based model likes HPQ's earnings yield. This methodology ranks all stocks based on their earnings yields and then combines that ranking with each firm's ranking based on its return on total capital to determine the strategy's level of interest. HPQ's earnings yield is 19.59 per cent, which ranks it 16th among the stocks in the Validea database.
HPQ also scores highly in the Kenneth Fisher-inspired investment model. A company's price-to-sales ratio is one of the favoured criteria in the model. Non-cyclical companies with price-to-sales ratios below 0.75 are tremendous values and should be sought. HPQ's ratio of 0.40, based on trailing 12-month sales, is considered quite attractive.
The company's total debt-to-equity ratio (24.39 per cent) is also favoured by the Fisher model.
HPQ is also a constituent with the Top Five Gurus portfolio. This model selects stocks using five of Validea's Strategies with the best risk-adjusted returns. Twenty per cent of the portfolio is selected using each strategy.
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