A common pitfall companies encounter has to do with challenging marketplace conditions, be it changing customer habits or competition from rivals that attempt to steal away its business. Others have a habit of self inflicting their wounds.

Changing market conditions, foreign competition, fickle consumers — these are conditions most investors can live with as an excuse for poor performance — to an extent. But when a dominant company continually stumbles over itself because of something as simple and within the realm of control as, say, hiring and firing decisions, its enough to make investors head for the exit.

But in the case of Hewlett-Packard (NYSE: HPQ), the crowd has it all wrong. Sure, the soap-opera events surrounding the dismissal of Mark Hurd, HP’s former Chief Operating Officer, were embarrassing for the company, but new investors now have a chance to pick up a world-class name for a cheap price.

The most recent snafu from HP relates to the manner in which it ousted Hurd. Apparently, he wasn’t as popular inside the company as he was outside. Investors cheered his every move, be it cost cutting or orchestrating sizeable acquisitions, both of which helped sales and profits move forward in impressive fashion.

Past issues have stemmed from the hiring of Carly Fiorina, a high-profile executive from outside the company that oversaw the ambitious purchase of Compaq Computers. Unfortunately, this move and others did nothing to boost the share price and resulted in her sacking within a few years. Shortly after this chain of events, Patricia Dunn, the company’s chairwoman, was fired after it was discovered she hired private-eye firms to spy on other board members.

Talk about internal company drama.

The reasons for the sacking of Mark Hurd are not clear and may never be, because the board of directors did not provide a straightforward explanation of why he was let go. Doctored expense reports and a murky relationship with a woman who worked on corporate events for the company were alluded to, but never fully explained. Whatever the real reason may be, it leaves the company without a CEO that appeared to be wildly successful to those outside of the company.

This uncertainty has sent shares of HP to bargain-basement levels. Communication from the board has stated that HP is not dependent on any one individual for its success and refers to an “HP Way” that is meant to define its culture and no-nonsense, team approach to creating and selling technology products and services. Despite the board’s dismal track record on communicating with the investment community, it is spot on in this case.

Regardless of the litany of leadership drama at HP, the company’s corporate culture appears to be working. HP has been experiencing improving demand in most of its businesses. Revenue during its most recent quarter increased a very healthy +11.4% and reached $30.7 billion on the back of strong trends for its enterprise storage and servers, computers and printers. Service growth was more modest but remained highly profitable. HP also provided a favorable outlook. It expects full-year sales to reach more than $125 billion and earnings from continuing operations of around $4.50 per share. This would represent year-over-year sales growth of almost +10% and earnings growth in the mid-teens.

In addition to the strong organic growth trends, HP has snapped up a number of smaller tech rivals. Bolt-on acquisitions include data-storage firm 3PAR (NYSE: PAR), and software security providers ArcSight (Nasdaq: ARST) and Fortify Software. Healthy cash flow generation is being used on acquisitions, share buybacks and to support a modest dividend.

Favorable market tailwinds and healthy acquisition activity mean HP is unlikely to see any serious disruption to its operations while it searches for a successor. I’ve had past concerns that the hardware (computer, printers, etc.) divisions are too cyclical and carry low profit margins, but the company has a few years of easy sailing as global economies recover from the credit crisis and companies refresh aging devices to remain competitive.

Action to Take —> At a forward P/E of just over 9, investors are far too pessimistic on HP’s future. Near-term negative sentiment from the Hurd firing isn’t helping, but does offer an opportunity to pick up the shares on the cheap. Last year, free cash flow ran close to $4.60 per diluted share and illustrates just how much excess capital the company generates.

This also equates to a trailing free cash flow multiple around 9. Applying a more historical multiple in the low teens off of earnings and cash flow suggests upside of at least +40% and doesn’t even factor in annual profit growth, which should be at least +10% for the foreseeable future. In my mind, it doesn’t really matter who the next CEO will be, or how long he or she remains at the helm — the stock is still a buy.