Watch These Stocks After The U.S. Close
Estimize | Nov 22, 2016 12:55PM ET
HP Inc. (NYSE:HPQ): Both HPQ and the enterprise branch of the company have performed well after splitting near the end of 2015. Shares of the parent company are up over 30% in 2016 on a string of better-than-expected quarterly reports. Strong financial performance can be contributed to the remarkable success of its printing and personal computer segments, both which have been written off in recent years. Newly launched products along with efficient execution on strategic initiatives will continue to bode well. The recent acquisition of Samsung's (KS:005930) printer business for $1.05 billion is a clear indication that HP won’t be abandoning its printer business. An continued foray into 3D printing will add another layer to this portion of the business. Nonetheless, HPQ faces stiff competition from the likes of International Business Machines (NYSE:IBM) and Apple (NASDAQ:AAPL) in terms of PC and tablet sales.
GameStop (NYSE:GME): Despite being in one of the hottest industries, GameStop has been unable to reverse its recent losses. In the past, GameStop was one of the only widely dispersed video-game providers in the country, but now there are a plethora of options including Amazon.com (NASDAQ:AMZN) and Best Buy (NYSE:BBY). Major publishers such as Activision Blizzard (NASDAQ:ATVI) and Electronic Arts (NASDAQ:EA) have also begun selling games directly to consumers, bypassing and hurting the sales of GameStop. Gamestop’s foray into collectibles and other consumer electronics should help offset some of the challenges it’s facing in the video-game industry. Needless to say, this quarter isn’t expected to reverse the ongoing downturn. During the second quarter, management guided a 6 to 7% decline in same-store sales, compared to a decline of 2% and an increase of 1% previously forecasted.
Urban Outfitters (NASDAQ:URBN): Urban Outfitters has been one of the biggest beneficiaries from the rebound in retail. A recent string of better-than-expected results has propelled the stock nearly 65% in 2016. Outside of an improving retail sector, Urban Outfitters remains committed to driving comps by expanding its omni-channel capabilities and enhancing productivity in existing channels. Its exposure to international markets, particularly Canada and Europe, could hurt the bottom line due to the strength of the U.S. dollar relative to other major currencies. Meanwhile, the retailer faces stiff competition not only from department stores but fast-fashion companies like H&M. Like the rest of the retailers, any small miss or inclination of weakness during the pivotal holiday season will send the stock plunging.
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Hewlett Packard Enterprise (NYSE:HPE): Unlike HPQ, which handles hardware and HP’s legacy business, HPE is in the business of cloud computing and data centers. These high-growth markets have contributed to strong performance and have pushed shares higher by 50%. Its focus on efficiency and on these fast-growing, high-margin sectors will continue to bode well. The company is also strategically parting ways with struggling business. Earlier this year HPE agreed to spin off its non-core software assets and merge with Micro Focus International (LON:MCRO) in a deal worth $8.8 billion. This is proving to be a favorite strategy for HPE and so far investors have very little to question these moves.
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