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3 PC Stocks To Invest In During The Pullback

Key Points
The personal computer industry has experienced a period of contraction, creating opportunities for investors to find undervalued stocks in the market.
When the industry faces slowdowns, there can be potential buying opportunities.
5 stocks we like better than International Business Machines
The technology industry has had its ups and downs this year, with companies like NVIDIA and Apple seeing significant price swings. Specific trends within the industry drive these price fluctuations.
According to the July ISM manufacturing PMI report, the computer industry has been experiencing contraction as customers are reducing or delaying orders. Apple’s PC department has experienced a similar trend.
Less well-known companies in the industry are worth considering, especially if their stock prices are expected to decline from current resistance levels. This strategy allows investors to buy high-quality stocks at reasonable prices as the industry bottoms out.
Hewlett Packard
Hewlett Packard Enterprise (HPE) has some positive factors that could push its stock higher. The “Intelligent Edge” segment, which accounts for 18% of HPE’s revenue, has been growing due to trends related to returning to office and back-to-school activities. The demand for this segment is rising as it provides network systems, such as Local Area Networks (LAN). However, the “Computing” side of the business has contracted, which may contribute to a 4.5% downside to the stock according to analyst ratings. The stock is currently facing strong resistance at $17.75 to $18.25 per share, and its upcoming earnings announcement on August 29th is expected to bring a slowdown. Investors should wait for the earnings announcement and consider buying at support levels around $12.50 to $13.50 per share.
HP
HP’s revenues mainly come from selling personal computers and accessories. Analyst ratings suggest a net 6.7% downside to HP’s stock today, as the company’s expected EPS growth for 2024 is lower than the industry average. However, as demand picks up, sentiment may change, presenting an opportunity to buy the stock at a discounted price. HP’s forward P/E ratio of 9.0x is significantly lower than the industry average of 22.5x.
International Business Machines
Although International Business Machines (IBM) is not heavily reliant on the PC market, it is affected by trends in computing and software. While software revenue rose by 7% in the past year, infrastructure revenue declined by 15%. IBM is expected to report a similar slowdown in its quarterly earnings on October 25th, which could lead to a better buying price. Currently, the stock is facing resistance, and investors can consider buying at $115 to $120 per share for an upswing. IBM’s expected EPS growth rate for 2024 is lower than the industry average, indicating a potential pullback. Value investors can take advantage of this and acquire the stock at attractive valuations once the pullback occurs.
It’s important to note that while International Business Machines currently has a “Hold” rating among analysts, there are other stocks that analysts believe are better buys.

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