HP(US:HPQ) Benzinga·2026-01-02 21:49Core Viewpoint - Despite the prevailing narrative about the decline of personal computers and the challenges faced by legacy companies like HP Inc (NYSE:HPQ), the stock exhibits an upward bias due to its unique performance characteristics and strong cash flow generation [1][5]. Group 1: Stock Performance - Over the past 52 weeks, HPQ stock has experienced a loss of approximately 32%, with a 12% decline in the last month [2]. - The concept of non-ergodicity explains the discrepancy between the stock's poor performance and its upward bias, as HPQ tends to recover slowly between sell-offs [3]. Group 2: Market Position and Fundamentals - The assertion that personal computers are "dead" is misleading; while the market for PCs is mature, they remain essential infrastructure for work, and their role is unlikely to diminish even with advancements in quantum computing [4][5]. - HPQ generates significant free cash flow of $2.8 billion, indicating that it is not a dead business model and deserves more recognition than it currently receives [5]. Group 3: Trading Strategy - Retail traders have the advantage of pricing risk non-monotonically, allowing for strategic trading opportunities that differ from institutional approaches [6][7]. - A forecasted price range for HPQ stock over the next 10 weeks is between $21.80 and $22.80, with a peak probability density around $22.30, indicating an upward bias [10]. - Under current market conditions, a non-monotonic risk model suggests a potential price peak of $24.20, contrasting with traditional models that predict $22.30 [12]. Group 4: Options Strategy - A recommended trading strategy involves a 23/24 bull call spread expiring on February 20, 2026, which could yield a maximum payout of over 163% if HPQ stock rises above the $24 strike price [15]. - An alternative 23/25 bull spread could generate a maximum payout of over 257%, but the significant probability decay between the strikes makes the 23/24 spread a more favorable option [16].