HP Earnings Poised to Jump by LEAPS and Bounds

Hewlett-Packard Company (NYSE: HPQ) shares moved higher after a solid fourth quarter and LEAPS could be the best way to play the strength. The technology company surprised Wall Street this week with after earnings beat expectations despite other technology giants slashing forecasts and posting weak results. The technology firm also issued better-than-expected forecasts for the upcoming year despite economic headwinds, which has many investors very bullish on the stock.

Hewlett-Packard forecasted top-line revenues of $33.6 billion compared to analyst expectations of $33.09 billion while predicting bottom-line adjusted earnings per share of $1.03 per share compared to analyst estimates of $1.00 per share. The technology giant attributes the better-than-expected forecasts to its global reach, diverse customer base, broad portfolio and numerous cost initiatives. Results were also helped by its $13.9 billion acquisition of Electronic Data systems Corporation.

Hewlett-Packard is expected to release its earnings on November 24th. Investors looking to establish a long-term position in the company may want to consider purchasing LEAPS options over outright stock. Currently, the $30 January 2011 LEAPS calls are trading for $10.90 a piece, which means that investors can buy the right to purchase 100 shares between now and January 2011 for just $1,090 up front. The breakeven on the position would be $40.90 per share.

 Email This Story
Join LEAPSInvestor.com