HP has had an impressive run over the past six months as its shares have beaten the S&P 500 by 20.7%. The stock now trades at $25.12, marking a 29.3% gain. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is there a buying opportunity in HP, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think HP Will Underperform?
Despite the momentum, we’re sitting this one out for now. Here are three reasons why there are better opportunities than HPQ, plus one stock we’d rather own.
1. Revenue Spiraling Downwards
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, HP’s demand was weak and its revenue declined by 1.2% per year. This was below our standards and signals it’s a low quality business.
2. Projected Revenue Growth Shows Limited Upside
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect HP’s revenue to stall, a deceleration versus its 1.2% annualized declines for the past five years. This projection is underwhelming and indicates its products and services will see some demand headwinds.
3. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
HP’s EPS grew at 2.5% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 1.2% annualized revenue declines and tells us management adapted its cost structure in response to a challenging demand environment.
Final Judgment
HP doesn’t pass our quality test. With its shares beating the market recently, the stock trades at 9.1× forward P/E (or $25.12 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now. We’d suggest looking at the most entrenched endpoint security platform on the market.
Stocks We Would Buy Instead of HP
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
