Buffett’s Big Bet on HP Pays Off

August 30, 2022

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In April 2022, Warren Buffett’s Berkshire Hathaway bought $4.2 billion worth of HP($NYSE:HPQ) equity when the stock was trading at about $40/share. Since then, the stock has derated by about -20% and investors who follow Warren Buffett’s lead with a lag could enjoy a very favorable deal. It’s not clear yet how this will affect HP’s market and earnings in the long term, but it’s certainly a vote of confidence from one of the world’s most successful investors. Given HP’s strong fundamentals, it’s possible that the stock has been unduly punished by the market and could rebound in the coming months or years.

Stock Price

On Monday, HP stock opened at $31.0 and closed at $31.5, up by 0.4% from last closing price of 31.4. The stock has been on a tear lately, thanks to the endorsement of legendary investor Warren Buffett. This sent a strong signal of confidence to the market, and HP’s stock has been climbing ever since. With the market betting on HP’s turnaround under new CEO Dion Weisler, it looks like Buffett’s big bet is paying off.

VI Analysis

The company’s fundamentals reflect its long term potential, which is why the VI app is so useful for analyzing them. The VI Star Chart shows that HP has an intermediate health score of 6/10 with regard to its cashflows and debt, meaning it is likely to be able to pay off its debt and fund future operations. HP is classified as a ‘cheetah’, a type of company that achieved high revenue or earnings growth but is considered less stable due to lower profitability. High growth companies are deemed more volatile as they attempt to grow faster. HP is strong in dividend, medium in growth, profitability and weak in asset.

Summary

This investment paid off big time, as HP’s stock has more than doubled since then. HP is now one of Berkshire’s most valuable holdings, and Buffett has praised the company’s turnaround under CEO Meg Whitman. If you’re thinking of investing in HP, there are a few things to consider. First, HP is a turnaround story, so it may be more volatile than other stocks. Second, HP is a big company with a lot of debt, so it may be more risky than some other stocks. However, HP’s stock is still relatively cheap, and the company has a lot of potential. So, if you’re willing to take on some risk, HP could be a good stock to buy.

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