For years the personal computer (PC) sales lagged, and it took forever for the big hardware players in the business to rebound and get back in the game. Over the past few years, with companies needing desperately to update employee workstations, the demand for PCs spiked, and the top stocks saw a big benefit. However, a new research report from RBC shows that PC sales, especially in the notebook arena, are down big.

The RBC analysts reported that notebook unit sales were down 22% in February, versus just a 5% decline a short two years ago. Historically, the RBC team notes that notebook sales have declined about 10% in the first quarter. They think the drop this year could be as much as a staggering 25%. They attribute the decline to excess inventory and weak European and emerging market demand, and that also includes China. It should be noted that Intel lowered its first-quarter forecast Thursday morning, citing slowing business PC sales among other issues.

The RBC team is focused on four stocks that could also see an impact from this decline. While it may be a rough quarter, they are still reasonably bullish on the stocks long term. The four stocks are CDW Corp. (NASDAQ: CDW), Hewlett-Packard Co. (NYSE: HPQ), Seagate Technology PLC (NASDAQ: STX) and Western Digital Corp. (NASDAQ: WDC).

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CDW

The company had a very large secondary stock offering last fall, which added to the free float. CDW came back from private equity land with a highly anticipated initial public offering, and it has gone straight up in price for almost two years.

CDW provides provides information technology (IT) 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. The RBC team notes the company has 20% of its business exposed to the U.S. market, with no revenue to speak of outside North America.

CDW investors a paid a small 0.7% dividend. The stock is rated Outperform with a $39 price target. The Thomson/First Call consensus price target is $40.50. Shares closed Wednesday at $36.10.

Hewlett-Packard

The stock trades at a very low 9.3 times 2015 estimated earnings, and it has been hit sharply, compared to the highs printed in early January. The RBC analysts feel that weak PC demand could negatively impact revenue and free cash flow at the company. The recent decline in the stock may represent investors already discounting a weak first-quarter from the Silicon Valley icon.

HP investors are paid a 1.95% dividend. RBC has the stock rated Sector Perform with a $38 target. The consensus price target for the stock is $40.77. The Shares closed Wednesday at $32.61.

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Seagate Technology

It is still down big from the highs posted late last year, and some insiders have been selling the stock recently. The company and other hard disk drive (HDD) stocks took a hit during earnings season and are just now starting to bounce back. Seagate’s sizable stocks repurchase program may put some support under the stocks. With 40% of the HDD market, the company may have issues in the first quarter as soft PC demand translates to lower HDD units being shipped.

Seagate investors are paid a very solid 3.8% dividend. RBC has the stock rated Outperform with a $67 price objective. The consensus target is set at $65.40. Shares closed Wednesday day at $54.36.

Western Digital

Is another leader in the total addressable HDD market at a very impressive 43%, and like Seagate it should experience lower shipments if PC trends stay the same through the balance of the quarter. Western Digital attributed much of the gain in revenue growth in recent quarters to the consumer electronics/gaming unit, which saw the biggest upside in the fiscal fourth quarter, shipping 10.9 million units, up 67% year-over-year. This could help temper the PC decline.

Western Digital investors are paid a 2% dividend. RBC has the stock rated Outperform with a $122 price target. The consensus figure is slightly lower at $120.65. Shares closed Wednesday at $97.89.

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Given the downturn in some of the stocks in the report, one would think that some on Wall Street are anticipating the same decline the RBC analysts are projecting. It may make sense to continue to watch these top companies for any sign of a reversal and then buy partial positions.

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