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4 Stocks to Watch as PC Sales Continue to Soar

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The COVID-19 pandemic has rattled several industries but has also given a fresh lease of life to many others. PCs, which include laptops and tablets, is one among the beneficiaries. As millions worked and learned from home during the pandemic, PC sales, which were declining before, bounced back and this market is on its growth path once again.

Although offices and businesses have started opening and are fast getting back to their optimum level of operation, the work culture has changed largely since the coronavirus outbreak. This has seen the PC market record one of its best years in a decade. Given this scenario, companies like Apple, Inc. (AAPL - Free Report) , HP Inc. (HPQ - Free Report) , Lenovo Group Limited (LNVGY - Free Report) and Alphabet, Inc. (GOOGL - Free Report) are expected to perform well in the near term.

PC Shipments Continue to Soar

According to the International Data Corporation Worldwide Quarterly PC Monitor Tracker, PC shipments grew 5% year over year in 2021. A total of 143.6 million shipments were done in 2021, which hit a nine-year high.

PC shipments had hit 150.3 million back in 2012 but had declined since then. In the pandemic-ridden 2021, the industry faced some challenges in the fourth quarter, including the holiday season when sales had declined, but it was still a great year.

PC Market on Solid Ground

Almost all companies performed well, with Dell Technologies (DELL) and Lenovo delivering solid growth in shipment in both the fourth quarter and 2021.

PC sales have been declining for several years, as smartphones have taken a larger share of the market. The pandemic, on the other hand, resurrected the venerable PC market, as the entire world worked and learned from the comfort of their own homes.

Although offices and businesses are reopening, the COVID-19 pandemic is far from over. The work culture that changed during the peak of the pandemic has thus become a new normal as millions continue to work from home. This saw PC shipments soaring to new highs in 2021 and the trend is continuing into this year too.

In addition, the videogame industry has been aiding PC sales. The pandemic saw videogame sales soar, which led to a rise in sales of PCs.

Stocks to Watch

Apple, Inc. primarily runs its business around its flagship iPhone. However, the Services portfolio, which includes revenues from cloud services, App store, Apple Music, AppleCare, Apple Pay, and licensing and other services, is now the cash cow. Moreover, AAPL’s non-iPhone devices like Apple Watch and AirPod gained significant traction. In fact, Apple dominates the Wearables and Hearables markets due to the growing adoption of Watch and AirPods.

Apple’s expected earnings growth rate for the current year is 9.8%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. AAPL carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

HP Inc. is the surviving entity following the November 2015 split of Hewlett-Packard Company into publicly traded entities — Hewlett Packard Enterprise Company and HP Inc. HPQ is a leading global provider of personal computing and other access devices. HP’s other products include imaging and printing products, and related technologies, solutions and services to individual consumers, SMBs and large enterprises, including customers in the government, health and education sectors.

HP’s expected earnings growth rate for the current year is 12.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. HP has a Zacks Rank #3 (Hold).

Lenovo Group Limited is a personal technology company. LNVGY is dedicated to building PCs and mobile Internet devices. Lenovo's business is built on product innovation, a highly-efficient global supply chain and strong strategic execution.

Lenovo’s expected earnings growth rate for the current year is 99.4%. The Zacks Consensus Estimate for current-year earnings has improved 9.6% over the past 60 days. LNVGY has a Zacks Rank #2.

Alphabet, Inc. has been one of the best performers in the PC market lately. One of the biggest reasons behind GOOGL’s success is the high demand for Chromebooks, which has revolutionized the PC market once again.

Alphabet’s expected earnings growth rate for the current year is 4.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.1% over the past 60 days. GOOGL has a Zacks Rank #3.

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