Hewlett-Packard Feels the Love

 | Aug 21, 2014 | 2:44 PM EDT
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I am astounded with Hewlett-Packard (HPQ) -- astounded. I understand entirely why it shouldn't be down. Its cash generation is superb and the cash position is amazing. Consider where the company was when CEO Meg Whitman inherited it, and, now, the personal computer business is roaring and taking share.

But by Whitman's own admission, there is much work to be done. Sure, the company owns the print business more than ever. But it has a tiny presence in the fastest growing part of that business, three-dimensional (3-D) printing, and its margins are not so hot. Also, both its enterprise business and its software business were disappointing, again, to the company. The 1% revenue growth is a triumph vs. where the company was but it isn't something that merits a 2-point run. I bet even management is surprised by these results.

All that said, here's the deal: This market loves tech and it loves turnaround -- and Hewlett-Packard remains the biggest tech turnaround out there. Hewlett-Packard is what we want from IBM (IBM): a turned situation that is growing. Meg Whitman has done an astounding job at bringing this company back from the dead and it is possible that she is now able to play offense.

Remember, this stock was down $1 before our interview with Whitman on "Squawk on the Street." She told a terrific story and I totally get the reversal.

But would I buy it at its current levels? Only if I believed that things are getting dramatically better in the world and I wanted to add a gross domestic product tech play.

And that's exactly, I believe, what people want. That's the real reason why I think the stock is going higher. If you believe in that thesis, then be my guest, but don't confuse the issue: This quarter was in line, but a mixed bag, with a CEO who is doing a great job but could use some tailwinds for help. She might just be getting them.

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