Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns.
One such stock that you may want to consider dropping is Hewlett Packard Enterprise Company (HPE - Free Report) , which carries a Zacks Rank #5 (Strong Sell) right now.
Hewlett Packard recently announced the spin-off of its struggling IT services segment – Enterprise Services, which will be merged with Computer Sciences Corporation. The strategic step will help the company focus more on high margin businesses including enterprise class server and storage markets. However, in recent times, the company has been witnessing a negative trend in its earnings growth rate, owing to lower growth on enterprises due to leveraging of their servers through virtualization in certain cases.
In its last quarterly report, the company mentioned the major challenges that it’s facing — heightened pressure from unfavorable currency exchange movements, increased commodities pricing and some near-term execution issues, which are likely to affect the company’s overall performance in the near term. The recent acquisition of EMC by Dell has also posed new competitive challenges for Hewlett Packard.
So it may not be a good decision to keep this stock in your portfolio, at least if you don’t have a long time horizon to wait.
(We are reissuing this article to correct a mistake. The original article, issued on Apr 10, 2017, should no longer be relied upon.)