Shares of global computing devices company HP Inc. (NYSE:HPQ) have pulled back nearly 10% over the last few weeks. The stock traded at $35.57 per share on May 7 and closed at $32.17 on Wednesday. We believe that HP shares are in a good position to bounce back heading into June, especially if it continues to outperform earnings expectations.
Why HP stock is a buy
HP declared a dividend per share of $0.1938 on Tuesday payable on July 7 to shareholders as of June 9. This declaration came a few days before the company reports its fiscal second-quarter results for 2021— on May 27 after markets close.
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The dividend date will be a notable catalyst for the next rally. Investors will be looking to buy shares of the company before June 9 in order to qualify for dividend payment on July 7. The stock is currently valued at a forward dividend yield of 2.41%.
HP expects to post adjusted Q2 earnings per share of $0.64 to $0.70 while analysts at Zachs have a consensus estimate of $0.65. If the company continues to outperform expectations for the fifth consecutive quarter, there is a chance that the stock will bounce back going into next month.
Shares of the company trade at an attractive P/E ratio of just 13.68. Its 12-month forward P/E ratio of 9.43 and a PEG ratio of 0.69 indicate a significant earnings growth for the next year and the next five years, respectively.
Technically, HP stock appears to have recently pulled back to trade at a new 2-month low of about $31.24. Shares of the company topped $36.00 before the latest pullback. The stock price is now pinned just below the 100-hour moving average.
The bulls will target short-term rebound profits at around $33.17 or higher at $34.68. Key support levels can be found at $31.24 and $29.95. The relative strength index indicates that there is currently no bullish or bearish bias in the shares of the company. But this could change when the company announces Q2 results.
Bottom line: Buy HP stock ahead of earnings and dividends
HP stock appears to be attempting a rebound following the latest pullback. Upcoming earnings and dividends could be the catalyst to drive the stock price higher in June. This could be the perfect opportunity to add another blue-chip tech stock to your portfolio.
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