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Tickers in this Article: HPQ, DELL, IBM, AAPL
Several stocks have tremendous upside potential over the next several years, and Hewlett-Packard (NYSE: HPQ) is one of them. Today, I'd like to touch on the California-based company's fourth-quarter results, which it released this past week, and give my take on where I think the stock is going.

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HP Dishes Out Solid Numbers And Other Goodies

In its Q4 ended October 31, the technology giant generated a $1.14 gain per share excluding items. That was slightly better than the $1.13 per share that analysts had expected the company to earn. In the earnings release, it offered other information that I thought was particularly good news.

Right off the bat, it spent more than $2 billion in the period to buy back its stock. I think it sends a very good message to the investment community that it saw fit to spend money on its stock with it priced in the upper end of its trading range. Clearly it saw the shares as a solid value.

HP also offered what I thought was an optimistic outlook for 2010. More specifically, it said that full fiscal year 2010 GAAP diluted EPS is expected to be in the $3.65 to $3.75 range, up from its previous estimate of $3.60 to $3.70, and non-GAAP diluted EPS is expected to be in the $4.25 to $4.35 range, up from its previous estimate of $4.20 to $4.30. I like that the company is willing to raise its outlook so early in the game. It's a sign of confidence in the near-term future. Overall, however, I sense that the company may be acting conservatively, and there could even be some upside to that range.

Will There Be More Or Less Demand For Technology?
The above was the down-and-dirty view. When considering the big picture, the question of demand is something that would-be investors should ask themselves. And when it comes down to it, I think that demand for things like printers and laptops will increase substantially in the future as populations increase and, by extension, demand to communicate for business and pleasure increases.

Others That Compute Too
HPQ trades at only about 11.5 times this year's estimate, which is $4.34. That is intriguing to me because the company is expected to grow more than 10% per annum in the next five years, according to data on Yahoo Finance. As a reference, Dell (Nasdaq: DELL), which I also like, trades at almost 15 times this year's estimate and at more than 12 times next year's estimate. That is a bit more pricey, but it is expected to grow more than 12% per annum in the next five years. Meanwhile, IBM (NYSE: IBM) trades at 13 times this year's estimate and at 11.5 times next year's estimate, and it is expected to grow more than 9.4% per annum in the next five years, according to the above-mentioned source.

I believe that Apple (Nasdaq: AAPL) is too expensive as it trades at more than 21 times next year's $9.42 estimate. Then again, proponents will argue that it is also expected to grow rapidly. Again, according to data on Yahoo Finance, the company is expected to grow more than 18% per annum in the next five years.

Bottom Line
Hewlett-Packard makes a great deal of sense both in the shorter and longer term. I feel that the recently reported quarter was a good one, and buying back stock leaves a positive taste in my mouth as well. (For more, see our article on Technology Sector Funds.)

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