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By Jason Stipp and Jeremy Glaser | 08-21-2014 04:00 PM

The Friday Five: HP Progresses; Target Misses the Mark

Plus, an under-the-radar retailer looks undervalued, B of A stays under scrutiny, and rate hike talk heats up.

Jason Stipp: I'm Jason Stipp for Morningstar and welcome to The Friday Five: Morningstar's take on five stories from the market this week. Joining me with The Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: You're welcome, Jason.

Stipp: Up first, HP reported results this week, and it shows that management is actually executing pretty well.

Glaser: They really are. They're cutting costs, and they're redeploying a lot of that spending into parts of the business that potentially could have higher returns. We saw that in the quarter, with revenue stabilizing, particularly with the strength of the personal device, PC business starting to look better--part of that is cyclical, you wouldn't expect that to always do better. But that is always nice to see.

They still have more work to do. There is room for profitability to improve. They still have some transition to Software-as-a-Service that could be a headwind for some time. But they really are producing a fair amount of cash and seem to be committed to returning that to shareholders.

Pete Wahlstrom, our HP analyst, doesn't think shares look attractive right now. He thinks you should wait for a bigger margin of safety, but this is certainly one to keep an eye on.

Stipp: On the other hand, Target reported results this week that were decidedly off-target. It shows that they still have a number of issues on a number of fronts.

Glaser: They really do. Target is having a lot of problems regaining their footing, particularly after this data breach in the United States. Comparable-store sales were flat in the U.S. as profitability declined, as they were trying to be more promotional to get people into the stores.

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