Top Picks 2017: HP, Inc.

01/16/2017 6:00 am EST


Harry Domash

Publisher, DividendDetective and Winning Investing

The first major high-tech Silicon Valley firm was founded in Palo Alto in 1939 by William Hewlett and David Packard, notes Harry Domash, editor of Dividend Detective.

Their company split into two separate firms in November 2015. HP Inc. (HPQ) retained the slow growth computer and printer businesses, while Hewlett Packard Enterprise Company (HPE), took over the sexy networking, security and software services businesses.

But HP Inc. could turn out to be the Cinderella of this story. The company recently introduced a new line of 3D printers that could change everything.

3D printers, which create three-dimensional objects by overlaying successive layers of material, have been on the market since the 1990s.

Excitement peaked three years ago when it looked like 3D printer sales were about to take off. But that didn't happen.

But according to HP, its new "Jet Fusion" 3D printers can produce products “ten times faster” and at lower cost than competitive printers.

But HP only installed its first production unit in a customer’s factory last month, so those claims are yet to be verified. But research says 3D printer should hit $18 billion by 2020. So if it works as HP expects, 3D printer sales could turn HP, Inc. into a fast growth company.

Meanwhile, most stock analysts are skeptical about its 3D project. Why? They were already burned once. 3D printing stocks are down 80% from their January 2014 highs.

So far I haven't seen any analyst forecasts for HP that have included 3D printer sales in 2017 or even in 2018.

Thus, there’s not a lot of risk here. If HP's 3D printers fall short, no one will have to cut forecasts. But, there's plenty of upside potential should HP’s printers work as advertised.

As a backstop, HP is paying a 3.5% dividend yield and has irons in the fire that could spur existing product line growth.

For instance, it recently agreed to acquire Samsung's electronics printer business (advanced design copiers). It is also developing advanced printing devices targeted to high-end commercial applications. 

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