4 Stocks Benefiting From Increasing Personal Computer Sales

By Lee Jackson Published Oct 13, 9:05AM EDT

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One big surprise this year has been the solid increase in personal computer sales after years of declining numbers. While some consumers have switched to laptops and tablets, many U.S. corporations have waited for years to update workstations for employees. The IT hardware analysts at RBC think that four companies will be notable beneficiaries of the solid pickup in sales.

In a new research report, the RBC team points out that all the major PC makers have shown solid year over year growth, with Hewlett-Packard and Dell remaining as the market share leaders at 27.8% and 24.1%. They highlight four stocks that may receive outsized benefits from the PC sales growth.

Hewlett-Packard Co. (NYSE: HPQ), with the leading market share, is an obvious stock that will benefit. The company is trading at a very low nine times 2014 estimated earnings, and made it big news with the announcement that the company will split in two, a course other major companies have used successfully. HP has had a remarkable comeback under the leadership of Silicon Valley veteran Meg Whitman, and by splitting the iconic tech giant into an enterprise company selling servers, networking and storage, and a PC and printer maker in a separate outfit, investors may be very well served.

HP investors receive a 1.9% dividend. The Thomson/First Call consensus price target is posted at $40.28. Shares closed trading on Friday at $33.50.

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Seagate Technology PLC (NASDAQ: STX) provides hard disk drives (HDDs), solid state drives and solid state hybrid drives that are designed for enterprise servers and storage systems in mission critical and nearline applications; for client compute applications comprising desktop and mobile computing; and for client non-compute applications, such as digital video recorders, personal data backup systems, portable external storage systems and digital media systems. The company has 43% of the total market and is an outstanding technology stock to buy at lower price levels.

Seagate investors are paid a solid 3.0% dividend. The consensus price objective is $64.80, and shares closed on Thursday at $55.42.

Western Digital Corp. (NYSE: WDC) is the other giant in the HDD arena, and the RBC analysts think that an improving PC environment could place upward bias on total HDD unit sales. They estimate 147 million units sold in the third quarter, and that could translate to big earnings for both companies. Western Digital drives are deployed by OEMs and integrators in desktop and mobile computers, enterprise computing systems, embedded systems and consumer electronics applications, as well as by the company in providing its own storage products.

Western Digital investors are paid a 1.76% dividend. The consensus price target is $112.71. Shares closed on Friday at $90.46.

CDW Corp. (NASDAQ: CDW) came back from private equity land in the past year with a highly anticipated initial public offering. With sales booming, the company is in great shape. CDW provides information technology products and services to business, government, education and health care customers in the United States and Canada. It offers discrete hardware and software products to integrated IT solutions, such as mobility, security, data center optimization, cloud computing, virtualization and collaboration.

CDW investors are paid a small 0.6% dividend. The RBC team is very positive on the earnings prospects, and they also think the company’s exposure to the mid-range storage market is a positive. The consensus price target is $35.44. CDW closed Friday at $29.01.

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While the jittery market is worrisome, earnings season is about to get into full swing. Solid third quarter numbers could jump-start all these top stocks to buy.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.