HP (NYSE:HPQ), the top PC maker in the world, is pulling further ahead of its top rivals, according to IDC's latest market share figures. Between the fourth quarters of 2016 and 2017, HP's global market share grew from 21.8% to 23.5%.

HP was followed by Lenovo (OTC:LNVGY), Dell, Apple (NASDAQ:AAPL), Asus, and Acer Group, in that order. Out of the top six PC makers, only HP, Dell, and Apple posted annual growth in shipments. HP's shipments rose 8.3% to 16.6 million, Apple's grew 7.3% to 5.8 million, and Dell's inched up 0.7% to 11.1 million.

HP's Spectre x2.

HP's Spectre x2. Image source: HP.

Simply put, HP is crushing its rivals in the PC market, which is approaching an inflection point. Total PC shipments rose 0.7% annually during the quarter, marking the industry's first positive holiday quarter in six years.

Understanding HP's comeback

Before HP split with Hewlett-Packard Enterprise in late 2015, its aging PC business was stuck in a rut. Lenovo, which acquired IBM's PC business in 2005, overtook HP as the world's top PC vendor in 2012 on robust demand for its cheap laptops.

But after splitting with HPE, HP focused on challenging Apple in the premium laptop market with high-end devices like the Spectre, and followed Microsoft's Surface with premium 2-in-1 devices. It also launched more high-end gaming PCs and secure systems for enterprise customers.

Thanks to those efforts, HP enjoyed a sharp recovery in the North American market at the expense of its rivals. In early 2017, HP reclaimed its crown from Lenovo, which saw its sales flatline on soft demand in its home market of China.

How strong is HP's PC business?

HP's Personal Systems (PC) revenue rose 13% annually to $9.1 billion during its fiscal fourth quarter, as its total shipments rose 6%. This marked an acceleration from the unit's 12% revenue growth during the third quarter.

During the fourth quarter, HP's notebook shipments and revenues respectively rose 8% and 16%. Desktop shipments also improved 2% with 10% revenue growth. Its total commercial and consumer revenues respectively grew 11% and 18%.

HP's Envy all-in-one PC.

HP's Envy all-in-one PC. Image source: HP.

That top line growth flies counter to the notion that PC sales could grind to a halt on longer upgrade cycles and the ubiquity of mobile devices. However, the unit's operating margin slipped 50 basis points annually to 3.8% during the quarter due to rising prices of components like memory chips, which caused the company's pre-tax earnings from continuing operations to dip nearly 1%.

HP tried to offset higher component prices with slight price hikes and changes in its supply chain, but that cyclical pressure will likely persist for a few more quarters.

How strong is HP's overall business?

HP's PC business generated 65% of its revenues and 30% of its pre-tax earnings from continuing operations last quarter. The rest came from its printing business, which is posting positive top and bottom line growth on robust demand for consumer printers and printing supplies.

HP is expanding that business by buying Samsung's printing unit, which will boost its market share in multifunction A3 printers, and expanding into new markets like mobile printers, industrial 3D printers, and next-gen metal 3D printers.

Wall Street expects HP's revenue and earnings to respectively rise 4% and 10% this year. The company currently pays a forward dividend yield of 2.4%, which is supported by a low payout ratio of 36%, and the stock still looks surprisingly cheap at 13 times forward earnings -- even after rallying 60% over the past 12 months.

The bottom line

HP is an easy stock to recommend for four reasons: it's outpacing the growth of the PC industry, it shrewdly dominates higher-growth PC markets while pivoting away from slower-growth ones like budget laptops, it pays a decent dividend, and the stock remains cheap in a frothy market. So if you're looking for stability, income, and value, HP might just be the right stock for you.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.