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Grab These 4 Stocks to Tap Solid Momentum in PC Shipments

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According to the latest data compiled by two independent research firms — Gartner Inc. (IT - Free Report) and International Data Corporation (“IDC”) — the worldwide PC sales continued its growth momentum for the third consecutive quarter.

Per the preliminary data released by Gartner, PC shipments in the fourth quarter were up 10.7% year over year to 79.4 million units. The upswing was also significantly higher than growth of 3.6% in the second quarter.

Per the data compiled by IDC, PC sales were up an astounding 26.1% year over year to 91.6 million units during the December-end quarter. This year-over-year increase also came in higher than the previous quarter’s growth rate of 14.6%.

Although the firms have reported different figures, both share a similar opinion that the year-over-year improvement was primarily driven by strength in consumer demand and improvement in the supply chain.

Further, the research firms believe that coronavirus crisis induced new normal trends, including work-from-home and online learning wave, have expanded PC market volumes and altered focus from mobile-first to PC-centric demand.

PC Sales Bound to Grow

The pandemic has necessitated the use of PC systems, be it for remote work, web-based learning, video conferencing, video gaming, social media, consumer entertainment and streaming or online shopping.

Moreover, as vaccine distribution and democratization takes its own time, apprehensions regarding contracting the new COVID-19 mutant strain is expected to keep people confined to the safety of their homes, for quite some time. This, in turn, boosts the prospects of PC market in the days ahead.

On the heels of strong consumer demand and supply shortages-led carry-forward of backlog into 2021, the momentum in PC market is poised to sustain.

Before we discuss the stocks well-poised to gain from optimism in PC shipment trends, let us take a look at leading PC vendors and the competing market share scenario.

Top Vendors

Per the data compiled by IDC, all top PC manufacturers witnessed year-over-year increases in shipments in the fourth quarter. During the October-December quarter, Lenovo (LNVGY - Free Report) expanded its stake over HP (HPQ - Free Report) , maintaining the top vendor position, with a market share of 25.2%.

HP continued to remain in the second position, with a market share of 20.9%. Dell Technologies (DELL - Free Report) , Apple (AAPL - Free Report) and Acer Group hold the next three positions, with a respective market share of 17.2%, 8%, and 7.2%.

Meanwhile, according to Gartner, HP holds the top spot with a 28% market share, followed by Dell’s 25.2%. The next three positions are held by Lenovo, Apple and Microsoft (MSFT - Free Report) , with a market share of 18.2%, 14.3%, and 5.3%, respectively.

One Year Price Performance

4 Stocks to Snap Up as PC Sales Surge

Dell is benefiting from continued demand for remote work, learning and gaming solutions. Moreover, strong order momentum in VxRail and PowerMax solutions, and PowerEdge servers hold promise. In fourth-quarter 2020, the company sustained its market share in the PC market at 17.2% with shipments increasing 26.8% on a year-over-year basis, per IDC.

Further, strong consumer business, with solid uptake of Latitude and Precision notebooks, and Commercial Chromebooks remain noteworthy. This Zacks Rank #1 (Strong Buy) company is also witnessing robust growth in the XPS premium line and gaming systems including Alienware, with solid uptick for both notebooks and desktops. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for its fiscal 2021 earnings has improved by 19.5% to $7.47 per share over the past 60 days.

HP is gaining from solid demand for PCs amid the coronavirus-led remote-working and online-learning wave. Furthermore, stringent cost control measures are expected to drive margin over the long run.

Product innovation and differentiations are the key catalysts that have helped HP in maintaining its competitive position in PC market. In fourth-quarter 2020, the company maintained its second position in the PC market with shipments increasing 11.3% on a year-over-year basis, per IDC.

Moreover, this Zacks Rank #2 (Buy) company’s expectation of returning at least $1 billion to shareholders every quarter is encouraging.

The Zacks Consensus Estimate for its fiscal 2021 earnings has improved by 16.6% to $2.67 per share over the past 60 days.

Alphabet’s (GOOGL - Free Report) Chromebooks have witnessed remarkable growth in 2020 on online-learning demand triggered by coronavirus induced stay-at-home wave.

Notably, Chromebook shipments hit a record high of 30 million units in the 2020, reflecting year-over-year growth of 80% courtesy of solid demand across the North American education market, per Gartner. In fourth quarter of 2020, alone, Chromebooks shipments soared around 200% on a year-over-year basis to 11.7 million units.

The Zacks Consensus Estimate for this Zacks Rank #2 company’s 2021 earnings has improved by 10 cents to $62.40 per share over the past 30 days.

Apple raked in the highest growth in PC shipments in the fourth-quarter 2020. Per IDC, in fourth-quarter 2020, the company expanded its market share in the PC market, which came in at 8%, up from 6.8% in fourth quarter of 2019, with Mac shipments increasing an astounding 49.2% on a year-over-year basis.

Robust adoption of the new MacBook Air and MacBook Pro and solid demand led by the back-to-school season acted as primary tailwinds for this Zacks Rank #2 company. Strong customer satisfaction and sales expansion globally are other positives.

Further, Apple revved up holiday quarter with the introduction of Silicon M1 MacBook Air, Pro, and Mac mini, with new M1 Macs in the pipeline. The new silicon updates hold promise and are likely to keep Mac sales ticking in the days ahead.

The Zacks Consensus Estimate for its fiscal 2021 earnings has improved by 2 cents to $4.03 per share over the past 30 days.

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