Lenovo Stock Prediction: Why You Should Go Long Lenovo

motek 1The 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

LNVGY – Lenovo Market


  • The PC market is finally stabilizing and has stopped its quarterly decline in global sales.
  • I endorsed a buy rating for HPQ, I am also endorsing LNVGY as a buy. Lenovo and Hewlett-Packard are the biggest beneficiaries of a recovering PC market.
  • The personal computer is not yet dead. Lenovo continues to innovate to make its PC products attractive and necessary to consumers
  • Lenovo also expects its smartphone and server business profitable in the near future. The shift to higher-margin phone models definitely helps Lenovo.
  • LNVGY has received very positive near-term and long-term algorithmic forecasts from I Know First. It might be wise to go long on this stock now.

I endorsed a buy rating for Hewlett-Packard (HPQ) at Seeking Alpha because of the recovering PC market. IDC reported earlier this year that sales of traditional personal computers have finally delivered positive growth last Q1 2017. It is only fair that I also endorse Lenovo (LNVGY) as a buy. These two companies continue to be the leaders in computer sales. HP and Lenovo are definitely the biggest beneficiaries when PC sales rebound.

LNVGY has posted positive YTD return this year, +6.91%. However, I still see some upside potential for this stock due to the improving market for traditional computers. HP, being an American company, has outperformed China-based Lenovo in the stock market this year. This glaring disparity of how Wall Street treats two equal PC companies will eventually be corrected.

I want to point out that, like Hewlett-Packard, LNVGY deserves the same support from institutional and retail investors. I look forward to bargain hunters to help push up Lenovo’s stock before 2017 ends. My FY 2017 YTD target for LNVO is 15-20%.

Lenovo Market

(Source: Google Finance)

Positive PC Sales Growth Is Going To Continue

The upside trend for PC sales might also continue this Q2, Q3, and Q4 of 2017.  This is because of new CPUs from Advanced Micro Devices (AMD) and Intel (INTC). I believe this year is the right time for individuals and enterprise customers to upgrade/replace their 8 or 10-year old computers.

The affordable pricing strategy of AMD for its Ryzen processors will also force Intel to equally lower its Core Series CPUs’ price tags. The cheaper PCs become, the more attractive they are to corporate and home PC buyers. My point is that AMD’s low-pricing of its latest 14-nanometer CPUs is a big help toward attracting more people to try buying computers again.

The past weakness of PC sales was likely due to Intel’s expensive Core Series processors. It took four years for AMD to finally come up with 14-nanometer processors that could compete with Intel’s CPUS. Now that AMD is again capable of offering competitive processors against Intel’s products, PC manufacturers desperate for more hardware margins will benefit from the pricing war between AMD’s Ryzen and Intel’s Kaby Lake processors.

The better margins possible in selling PC products should encourage OEMs like Lenovo to create more innovative PC products. The savings they get from cheaper processors can go to Lenovo’s Research & Development efforts. Innovation can help PC products remain relevant against the onslaught of tablets and smartphones.

Lenovo Has Evolutionary PC Designs

Another reason why HPQ is outperforming LNVGY is maybe that Hewlett-Packard has dethroned Lenovo as the world’s top vendor of PCs this year. For several years, Lenovo was the no.1 in terms of unit sales/shipments. This setback is just temporary. Lenovo is coming up with innovative PC products that should help it get on top again.

Lenovo Market

Lenovo used its Transform 2017 event last week to unveil its upcoming ThinkPad laptop design. I do not know about the advanced materials being touted by Lenovo for its next generation of laptops. The most important thing is that it features a bendable LCD screen and you can write on it using a stylus pen. Lenovo also noted that it can be spoken to – there’s going to be a built-in smart assistant in next generation ThinkPad laptops.

Lenovo Market

(Source: Lenovo)

The foldable/bendable LCD screen is real winner in my book. If Lenovo can deliver this technology, millions of home and corporate users will line up to purchase the new ThinkPad. Further, the smart assistant feature is also believable. Lenovo is working on its own version of Amazon’s (AMZN) Echo smart speaker. Like the Echo, the Lenovo Smart Assistant will be powered by Amazon’s cloud Artificial Intelligence Alexa Voice Service.

Further, Lenovo is now selling its most powerful small-form factor workstation PC. The $799 ThinkStation P320 Tiny is Lenovo’s Mac Mini killer for corporate users. It is a one liter computer that touts the latest Intel Core i Series processors and Nvidia’s (NVDA) Quadro GPU accelerators. Quadro is Nvidia’s brand name for workstation graphics accelerators.

Lenovo Market

(Source: Lenovo)

Companies, government agencies, and education institutions who want to save space and electric bill will likely appreciate the Lenovo ThinkStation P320 Tiny.

Lastly, Lenovo also has emulated HP’s new interest in expensive gaming PCs. Like Dell owns Alienware and HP has Omen Gaming computers, Lenovo also has launched its Legion brand of gaming PCs during this year’s CES event. The high-margins possible in selling $2k+++ gaming laptops and desktop computers is good for Lenovo’s bottomline. Legion could establish Lenovo as a real rival to Alienware gaming computers.

Final Thoughts 

Yes, it is true that Lenovo is hampered by its unprofitable smartphone business. However, PC sales and server sales generate most of Lenovo’s revenue. The temporary trouble over Lenovo/Moto smartphone division should not be a significant drag on LNVGY’s performance in the stock market. Lenovo’s Q4 2016 revenue was $9.6 billion. Lenovo’s  Mobile Business Group (in-charged of smartphones/tablets) only contributed $1.7 billion of that $9.6 billion.       

It is my gut feeling that LNVGY will shoot up in price pretty soon. All it needs is for some famous Wall Street analysts to point out that the stock market is not treating Lenovo equitably like Hewlett-Packard. Both of these PC vendors deserve some love from investors whenever there’s positive growth in PC sales. Like HP, Lenovo has a multi-billion Data Center Group that suppliers server, software, and maintenance services to enterprise clients. This is in spite of it being a Chinese company. More corporations around the world are starting to entrust their enterprise servers and data centers to Lenovo.

The handicap of Lenovo is that no Wall Street analysts seem to cover its stock. A check on TipRanks told me that sad fact. TipRanks, who tracks more than 4,000 Wall Street analysts, showed there is no analyst who covers LNVGY. It pains me to see that Wall Street is treating some Chinese global conglomerates unfairly.

Maybe I should apply as an analyst in one of those small Wall Street firms. My stock picking accuracy track record is better than all TipRanks-tracked Wall Street analysts.

My bullish outlook for Lenovo is again backed by the power of its positive algorithmic forecasts from I Know First. Whether you are short-term swing trader or a long-term investor, LNVGY is worth a bet right now.

Lenovo Market

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.

Lenovo Market

Past I Know First Success With LNVGY

I Know First has been maintaining its bullish forecast of Apple, such as its bullish article published on June 13th, 2016. In the article, it mentions that Lenovo’s strong relationship with global PC retailers is a key advantage over their competitors. Since then, LNVGY shares have risen 11.66% in line with the I Know First algorithm’s forecast. See chart below.

Lenovo Market

This bullish forecast for GOOGL was sent to I Know First subscribers on June 13th, 2016. To subscribe today click here.


Lenovo Market