If you combine the end of the quarter with the groundhog day Greece debacle, that is about all that was needed to have a tipping point. The good thing is Wall Street has already priced down second-quarter earnings, and top information technology hardware stocks have been beaten down all year. In a new report, Jefferies says three top stocks to buy may be putting in an important bottom and could be outstanding buys here.

While there could be more selling coming our way, and a shortened holiday trading week does not help, the three hardware stocks the Jefferies team likes have already taken a beating on personal computer (PC) sales concerns. Toss in the Micron blow-up, and you have the perfect recipe for buying stocks when the proverbial blood is in the streets.

The Jefferies analysts do trim the numbers and revise price targets, but they remind investors that a PC rebound is a second half story. With Windows 10 making a fall debut, and transitions to new and more profitable business silos, patient investors could make some big money.

Hewlett-Packard

This old-school tech stock has been sold off all year as investors have felt that the PC slowdown in sales could continue to hurt earnings. Hewlett-Packard Co. (NYSE: HPQ) stock is down a whopping 25% year to date and trades at a very low 8.2 times 2015 estimated earnings. Some Wall Street analysts feel that weak PC demand could continue to negatively impact revenue and free cash flow at the company. The recent decline in the stock may represent investors already discounting what could be a very so-so fiscal third quarter from the Silicon Valley icon when it reports in late August. HP does a large 65% of sales to foreign accounts, and the strong dollar could be finally topping out after a long run.

The company is focused on splitting into two entities, a move many analysts have applauded. One company, to be named Hewlett-Packard Enterprise, will focus on selling technology like servers and data center gear to businesses. The other, to be called HP Inc., will sell printers and personal computers. The Jefferies team feels that the company has the least downside risk of the three featured in the report.

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HP investors are paid a 2.35% dividend. Jefferies has a very solid $40.50 price target for the stock. The Thomson/First Call consensus target is $40.65. Shares closed Monday at $29.97.
Seagate Technology

This one is still down sharply from its highs posted late last year. Seagate Technology PLC (NASDAQ: STX) and the other hard disk drive (HDD) stocks took a hit during first-quarter earnings season and have just been absolutely pounded. Seagate’s sizable stock repurchase program may help to put some support under the stock. With 40% of the HDD market, the company may have issues again in the second quarter if the soft PC demand translates to lower HDD units being shipped, which is widely expected.

The company recently announced that its popular award-winning Backup Plus family of external storage offerings will now include 200GB of OneDrive cloud storage, an unmatched value for the category, and the addition of Lyve’s photo and video management app. Seagate Backup Plus drives come equipped with Seagate Dashboard software for easy plug-and-play PC backup, as well as the addition of mobile and social media backup. Seagate also announced a new high capacity for its Backup Plus portable at 4TB in a sleek 20.5mm form factor using a single platter portable drive.

The Jefferies team also points out that the slowing PC business helps to push ahead the Seagate’s transformation to a more cloud-driven product company. Add that to a huge 26% decline in the stock this year, and investors could be in for big gains.

Seagate investors are paid a very solid 4.41% dividend. Jefferies has a $60 price objective. The consensus target is set at $64.67. Shares closed the trading day on Monday at $49.02, down over 2%.

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Western Digital

This company is another leader in the total addressable HDD market at a very impressive 44%, and like Seagate should experience lower shipments if PC trends stay the same through the balance of the quarter. Western Digital Corp. (NASDAQ: WDC) attributed much of the gain in revenue growth in recent quarters to the consumer electronics/gaming unit, which saw the biggest upside last year, shipping 10.9 million units, up 67% year over year. This could help temper the PC decline.

Many analysts have pointed out that PC shipment trends thus far in 2015 do not bode well for HDD vendors that are looking to try and reach their 2015 total shipment growth targets, which are currently in the low single digits. The horrible numbers from Micron tend to reinforce that even more.

Again, like Seagate, the drop off in the PC business helps to spur initiative in the company’s cloud business, and the Jefferies analysts estimate that the company’s gross profit contribution from Business Critical (cloud) drives will exceed that of PCs by the second half of next year. Western Digital is the firm’s top pick in the space.

Western Digital investors are paid a 2.45% dividend. Jefferies has a $116 price target, and the consensus figure is lower at $115.05. Shares closed Monday at $81.96, down almost 3% on the day.

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Combine the current sell-off with stocks that have been down almost all year, and you have a recipe for something that could be very attractive. The Jefferies team now expects PC unit sales to decline 7% this year from 5% previously. For next year, they see 2% decline versus flat. If anything drives those numbers better, and the cloud business strengthens, these could be some of the best tech buys since 2009.

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