The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First. 

HPQ stock prediction

Summary:

• IDC has released its Q3 2017 PC report. HP, Inc. remains the world’s no.1 PC vendor. HP also bested its peers when it comes to Y/Y growth.
• The reason for HP’s consistent leadership is that it keeps innovating its PC products. A unique product like the Omen X VR Backpack PC is why HP is still hip.
• The Virtual Reality industry is growing at CAGR of more than 46%. It will grow to a $48.5 billion business by 2025. HP has several VR-Ready computer products for sale.
• As long as HP keeps its products fresh, there will remain a large pool of home and business customers for them.
• HPQ still received bullish near and long-term algorithmic forecasts from I Know First. This stock still has more upside potential.

IDC has reported its Q3 2017 global shipments of traditional PCs. Hewlett-Packard, Inc. (HPQ) retained its No.1 ranking with 15,295,000 PCs shipped out during the July to September quarter. HPQ also posted the best Y/Y growth in PC shipments at 6%. Lenovo (LNVGY), Dell, and Apple (AAPL) posted less than 1% in Y/Y growth. Asustek (ASUUY) suffered a -14.6% Y/Y in quarterly PC shipments.

This outstanding achievement is why HPQ remains a buy for value/long-term investors. HP, Inc. is battle-tested and flexible enough to retain its stature as the king of PC sales.

My last go-long endorsement for HPQ was last August 28. This stock has since returned +6.76%. However, I am reiterating my buy rating for HP, Inc. The global PC market has obviously normalized. Except for Asus, all other top PC vendors posted a positive Y/Y growth, December quarter is also usually the strongest period for PC sales.

Intel (INTC) has released its 8^th Gen Coffee Lake processors last October 5. These greatly improved Intel processors will encourage home and business users to buy new PCs this December quarter.

Why HP Remains The Top-Selling PC Brand

Lenovo used to rule the PC market. However, HP’s recent inventive PC designs is why Lenovo is now only playing second-fiddle. Products like the Omen X VR Backpack exemplify the innovative push of HP, Inc. Announced only last June, the 10-pound Omen X VR Pack is shipping out now. It is intended for gamers who want to enjoy Virtual Reality games or apps.(Source: Sarah Tew/CNET) 

Virtual Reality games and software require people to put on headsets. It makes sense therefore for HP to sell a backpack-based laptop so that users can experience a more immersive time in Virtual Reality. The pleasure of Virtual Worlds requires you to move around. This is only possible if you use a computer like the Omega X VR Backpack.

Why The Big Bet On Virtual Reality-Friendly Computers?

HP, Inc. has several VR-ready computers for sale now. My optimism over HP is because it is ready and willing to cater to Virtual Reality enthusiasts. VR-Ready computers are high-margin products that improve HP’s bottomline. People will keep on buying traditional PC products because they are powerful enough to run the latest Virtual Reality games/software.

Android tablets and smartphones are unlikely to be useful in immersive Virtual Reality.

(Source: Hewlett-Packard)

The bet on VR-Ready products is in-line with the fast-growing opportunities in the Virtual Reality industry. Grand View Research said the market for Virtual Reality products and services is growing at CAGR of 46.7%. This niche market will grow to a $48.5 billion business by 2025.

Products like the Omen X VR Backpack gaming PC and HP Z VR Backpack for business/education users are great examples why HP is at the forefront of the Virtual Reality industry. I hope that HP’s discontinuation of its Elite x3 Windows phone is its final Sayonara to smartphones.

HP should just focus on makings its PC products more relevant and attractive. It should just heed Microsoft’s (MSFT) example of releasing an Intel-based Cellular PC.

Conclusion

HP’s run as the no.1 PC vendor in the world confirmed its profitable resiliency in the face of competition from smartphones and tablets. Traditional PCs and workstations still have a sizable number of customers. The big push for VR-ready computers is also one way to make desktop PC and laptops remain in-demand among gamers, employees, and content creators.

I Know First still granted HPQ positive near and long-term algorithmic forecasts. You should go long HPQ while it still trades below $25.

Analysis of technical indicators and Candlestick patterns also support my bullish recommendation for HPQ.(Source: StockTA.com)

Past I Know First Forecast Success with HPQ

I Know First has made accurate predictions on HPQ in the past, such as its bullish article published on January 26th, 2017. The split occurred in 2015 allowed HPQ to focus on its core products (PC and printers) and to recover. Despite not finishing recapturing its market share, HP was developing a new range of products in order to satisfy the fast-evolving needs of its customers. Since then, HPQ shares have increased by 42.92% in line with the I Know First algorithm’s forecast. See chart below.

(Source: Google Finance)

This bullish forecast for HPQ was sent to I Know First subscribers on January 26th, 2017. To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.