Selection for this week
Some Pros about the stock
Some Cons about the stock
Why the Quants like this stock
Criteria for choosing
The previous selections

The momentum stocks in the portfolio as a group were unchanged since last Thursday’s update.

Add: HPE (Hewlett Packard Enterprise) – Communication Equipment

What does the company do?

Hewlett Packard Enterprise (HPE) provides technology solutions worldwide, focusing on servers, hybrid cloud, networking, and financial services. Its offerings include HPE ProLiant servers, storage and cloud solutions through HPE GreenLake, and networking products such as Aruba and Juniper technologies. HPE serves businesses, large enterprises, and public-sector organizations through a broad network of partners and resellers. Founded in 1939, the company is headquartered in Spring, Texas.

Why Some Investors Are Bullish

Record Q3 results — HPE reported record revenue of $12.2 billion, up 34% year over year, while non-GAAP EPS reached a record $1.11, well above the company’s prior guidance of $0.88–$0.93.
Significant margin expansion — Non-GAAP gross margin reached a record 40.4%, up 10.5 percentage points from a year earlier, while operating margin rose to 16.2%. Non-GAAP operating profit increased 155% year over year to nearly $2 billion.
Strong order growth and backlog — Orders increased 42% on a normalized basis, led by demand for servers, AI systems and networking. HPE said its backlog reached a record level, providing visibility into future revenue.
Higher FY2026 and FY2027 outlook — HPE raised FY2026 non-GAAP EPS guidance to $3.75–$3.85 and free cash flow guidance to at least $3.75 billion. For FY2027, the company now expects 13%–17% revenue growth, 16%–20% non-GAAP EPS growth and at least $5 billion of free cash flow.
AI and networking remain major growth drivers — Cloud & AI revenue rose 25.4% to $9.0 billion, while Networking revenue surged nearly 75% to $2.9 billion. HPE also generated $958 million of free cash flow during the quarter.

What Bears Are Worried About

Expectations are now high — HPE’s strong results and higher guidance have raised expectations for continued growth. Management also said gross margins are expected to moderate toward more historical levels as AI systems become a larger part of the business.
AI infrastructure growth requires substantial investment — HPE ended Q3 with $6.2 billion of cash and $20.2 billion of total debt, while inventory had risen to $11.8 billion. The company also had approximately $30.4 billion of unconditional purchase obligations, highlighting the capital and supply-chain commitments supporting its growth.
Valuation and sustainability are important considerations — After a major run in the shares, investors may place greater emphasis on whether HPE can sustain its unusually strong revenue growth and margins. The company itself expects FY2027 growth to remain strong, but its guidance also assumes some normalization in margins and operating expenses.

Why the Quants like this stock

P/E Non-GAAP (FWD) B+ 14.83
PEG Non-GAAP (FWD) A 0.52
Revenue Growth (FWD) B+ 21.75%
EPS FWD Long Term Growth (3-5Y CAGR) B 28.44%
ROE Growth (FWD) A- 24.29%
3M Price Performance A- 17.16%
FY1 Up Revisions (last 90 days) 18 Up 0 Down

Latest Quarter’s Earnings
Announce Date 9/2/2026
EPS GAAP Actual $1.06 (Beat by $0.41)
EPS Normalized Actual $1.11 (Beat by $0.17)
Revenue Actual $12.21B
Revenue Surprise Beat by $218.91M

My View

HPE’s latest quarter showed record revenue, expanding margins, strong orders and higher financial targets, with AI infrastructure and networking driving much of the growth. The key question for investors is whether HPE can maintain this level of growth and profitability as comparisons become tougher and margins normalize.

Top Quant Stock of the Week Criteria

I am using a Quantitative research platform that provides a daily list of top-ranked stocks to buy or sell, based on a Comprehensive Quant Score. This Quant system uses computer algorithms to come up with its rankings. This score incorporates multiple factors, including valuation, growth, profitability, momentum, and EPS revisions.

I will be giving heavy weight to strong momentum and strong EPS revisions to make the weekly selection. Then, I will use my tested proprietary criteria to sort and then break any tie.

One stock will be selected each week. That would make 52 selections a year if I don’t miss any weeks because of internet problems.

The hold times for the stocks added will be 1 week to years. Although a 1 week hold would be rare, it could happen if the stocks Quant metrics took a big nose dive right after being selected. If an added stock maintains its good metrics, it will be kept in the portfolio until it doesn’t. No time limit. The Quant system will tell me when it is time to let it go. So the hold time is short, medium and long depending on the Quant system metrics.

All countries are included. ADR’s are ok but Pink Sheet stocks will not be allowed.

Certain Industries are excluded. My testing shows they do not perform well using Quantitative rankings. Two of the main ones are BioTechnology and Pharmacueticals.

The Remove Criteria: Once the stock no longer qualifies to be retained in the Portfolio, it will be removed. This could be because the companies metrics have deteriorated since selection, it is involved in a buyout or financial reporting problems.

Once a stock has been added to the Active list, it will not be added to. No doubling down.

The stocks considered are larger small cap, mid cap, large cap and Mega cap. They will be fairly easy to trade with opening or closing market orders as one of the ways to enter and exit positions.

It should be expected that about 50 stocks will be Active in the Portfolio in any given week, once it gets to the two year mark.

All stocks are added as equal weight. No rebalancing is to occur.

To be considered for addition, the stock has to be in the top group of Quant rankings for just several weeks. This is to allow newly upgraded stocks to qualify quickly. Hopefully, this will catch a couple of strong momentum stocks early in their move.

Once a stock is removed for cause, it can be added back in once it meets the add criteria. No waiting period is required.

There will be no limits on percentages of stocks in the Portfolio by Sector or Industry.

Previous Selections:

All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions. This post was written with the assistance of artificial intelligence. The original ideas and final review are human-generated. Disclaimer