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Hewlett-Packard: The Ultimate PC Hedge for Investors?

Hewlett-Packard is expected to report quarterly earnings results after Tuesday's closing bell. Following a tumultuous year, which saw CEO Mark Hurd resign and other management changes, investors wonder if the world's largest technology company will report growth.

For Richard Kugele, an analyst at Needham & Co., H-P remains one of his top picks for 2011. Kugele said in many ways, H-P is the "ultimate PC hedge" for investors. Going forwards, he expects H-P will see solid information technology spending growth, continued corporate PC and server refresh and help from recent changes to the domestic tax code. It's also one of few big brands with a tablet offering, he added.

Some investors, though, are concerned about whether H-P will go on a spending spree, noted CNBC's Simon Hobbs. To that point, Kugele noted those concerns will be addressed at a strategic session on March 14. Even under Hurd, H-P had planned for some spending, he added.

"They need to innovate," Kugele said. "They are going to be a leader in the cloud, data center spending and such and they need to spend somewhat, but it's well-embedded in even current estimates."

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Kugele doesn't recommend trading H-P around the quarter. He's not looking for outstanding earnings results, either. He thinks it will be in the "middle of the fairway," meaning average. This is a name investors should buy for the second-half of IT spending, he said.

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UNUSUAL ACTIVITY

From the options market, Jon Najarian spotted some unusual activity in Carnival.

To power its fleet, the Miami-based cruiseliner consumes a considerable amount of oil. In turn, Carnival shares fell as the price of oil climbed on Tuesday. Options traders used the opportunity to buy July 47 calls, said Najarian, co-founder of optionMONSTER.com. Najarian doesn't think this was a short-term play. Options traders are simply positioning themselves because options became cheap.

Regardless of where the price of oil goes, Najarian thinks Carnival consumers will continue using their services. Therefore, he likes CCL on this dip.

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CALL THE CLOSE

At the conclusion of Tuesday's "Halftime Report," the "Fast Money" traders revealed where they think the market could go and how they plan to trade it.

Joe Terranova, chief market strategist at Virtus Investment Partners, thinks the market could go lower. Brian Kelly of Kanundrum Capital agreed.

"Make yourself up a shopping list," Najarian said. "You're going to get a chance to buy some stocks really cheap over the next couple of days."

Patty Edwards of Trutina Financial, on the other hand, thinks the market could close higher. She would be patient, though.

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