- In an economic rebound with stable oil, HP stock could rise up to 60% long term.

- Indiscriminate energy rally, but it’s time to pick financially strong companies

- HP is tech savvy; has robust balance sheet; cutting expenses; should survive and thrive

Regular readers of the research on our website know that we’ve been focusing in recent weeks on the attractions of cyclical stocks.

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The energy sector is up over 80% since the lows of March 23. But it’s also still down by over 40% from just 18 months ago. Granted oil prices were at $70 per barrel then, vs near $40 now.  Still, energy remains beaten up badly.

My view is that this energy bounce is the first wave, in which all stocks go up indiscriminately—even those in bad financial shape—because the sector is just less hated. The recent example of companies facing bankruptcy (Chesapeake Energy, CHK, among others) seeing their shares rise by large margin should tell you that.

The opportunity, I think, could be in the second wave of sector and stock improvement. It will be the best run companies in good financial shape that should do better. I think there’s gas left in the tank, if you’ll pardon the bad pun. A side benefit is diversification.  It’s possible many...

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