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Tickers in this Article: HPQ, DELL, WMT
Back in mid March, I suggested that with ex-CEO Patricia Dunn's shenanigans seemingly in the rear view mirror, Hewlett Packard (NYSE: HPQ) stock (then trading under $40) could trade to the $45 range within the year.

Well, it's trading at that level right now, but I don't think it's time to bail on the stock. Here's why I continue to like the company:

On The Upside
• It seems to be eating Dell's (Nasdaq: DELL) lunch. In fact, some argue that the recent announcement that Dell is abandoning its direct distribution model and planning to sell its wares in Wal-Mart (Nasdaq: WMT) is evidence that the pressure HP has been applying is working.

• Mark Hurd, HP's CEO, is cutting costs. He also, for the most part, comes across as an open and honest person - and the investment community likes that, especially given the memory of the previous environment and scandal under Dunn.

• The company continues to score big deals, including one with NASA said to be worth up to $5.6 billion, for desktops and workstations.

• On May 22, Gartner (which conducts detailed market studies) issued a report that suggests that Hewlett Packard is increasing its lead - when it comes to servers - over Dell. The article said that during Q1 HP's share of server shipments rose three points to 30%, while Dell's share declined to 21.1% of the worldwide sum from 21.7% in the prior year. In short, I would argue that this momentum will be hard for Dell to reverse.

• There are rumors circulating the company may announce further cost-cutting measures (the selling off of real estate, etc.). This could cause management to up its earnings guidance beyond what The Street is looking for.

• Hewlett Packard maintains a pretty good reputation for meeting earnings expectations.

• The company currently trades at under 16.5-times this year's (again, current) consensus estimate (of $2.78). Meanwhile, according to Yahoo! Finance the company is expected to grow about 12% this year and about 14% each year for the next five years. That's a bargain in my book.

On The Downside
However, with all of that in mind, there are still some solid reasons why I could be wrong:

• Dell is no slouch and neither is CEO Michael Dell. Don't count the company out yet.

• The deal Dell has going with Wal-Mart could just be the beginning. If the company is able to secure a number of other big-name retailers it could make serious inroads on Hewlett Packard.

• HP's stock has had a pretty nice run over the last several years. If the company does upset on the earnings front, the shares have plenty of room to fall.

• The "pretexting" issue has yet to totally die. In fact, there are rumors that the company may have spied on Dell.


The Bottom Line

The positives outweigh the negatives at Hewlett Packard and that its stock can still trade higher. If the company is able to hit the consensus number this year, and remains on track to meet the number next year ($3.12 a share), I think the shares could punch through the $50 level within the next six to nine months.

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