I sold my 500 shares of HPQ after realizing that two of the reasons I bought the stock may no longer be in play or as meaningful as I thought. I have a gain of $2,720.71 which I am happy about and it is just time to sell and move on. Ordinarily I dislike selling stocks I own for short term gains (as this one is) but it is better than holding on and seeing the stock go down. You can read my original HPQ buy analysis but the two main reasons are discussed below.
Is There Really An Earnings Turn Around?
I bought Hewlett-Packard hoping the company was in the midst of a long turn around which it sort of is. But the latest earnings report has gotten a lot of investors worried that CEO Meg Whitman is just not getting the job done. Earnings were unimpressive again and the company is laying off another 16,000 workers. Laying off workers cuts your expenses and may increase earnings but you can’t do that for long. I was getting increasingly concerned that HPQ really has nothing new to offer and that the so-called turn around might be stalling and that contributed to my decision to sell.
3D Printing Innovation No Longer That Exciting
Hewlett-Packard was/is supposedly going to enter the 3D printing space at the end of 2014. I bought my shares back in December of 2013 when all the 3D printing stocks (DDD, SSYS, XONE) were red hot and hitting new highs every day. It seemed at the time that buying HPQ might be a cheaper way to get into the 3D printer game and that with their expertise in printers, they might be able to make a meaningful dent in the industry.
Well, now that the 3D printer stocks have all cooled off and are down significantly from their highs, I don’t think it is going to help HPQ stock that much even if they do enter the market. The prevailing wisdom at this time is that perhaps 3D printing will not be as widely adopted by everyday people as once thought. It may change the way certain manufacturers make their products and most likely be adopted by them but the 3D printing industry may not end up being as profitable as investors had hoped. Thus, another reason why I sold my HPQ shares.
Its hard to know when to sell a stock but a big one is when the reasons I buy a stock in the first place no longer apply, it is then definitely time to think about selling. In the case of Hewlett-Packard, I felt selling now was the right action to take and the $2,720.71 gain made it easier to do!