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Ibm
IBM was out of favour stock in the Tech sector. Many ignored this and parked their money on speculative tech stocks. On the other hand Warrant Buffet bought this company surprise to many because he didn’t buy Tech stocks in the past. According to following links I too got excited. Is it a good company now?
http://www.fool.com/investing/2016/0...es-corp-2.aspx
Better Buy: International Business Machines Corp. vs. McDonald's
http://www.fool.com/investing/2016/0...iness-mac.aspx
International Business Machines Corporation's Biggest Win in 2016 So Far
It’s been a solid, if not spectacular, year for Big Blue, largely because it’s delivering on this key metric.
Appreciate any good ideas!
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Hi Marketwinner,
I've had IBM on my watchlist for about 2 years now. I was interested in this "behemoth" technology company because it's a dividend aristocrat ( > 25 years increasing dividend payouts) and its dividend yield was > 3%. Coupled with a low payout ratio of around 37% and healthy cash flows, this looked like a good value play in the technology sector.
However, I've held off for so long because I'm just not happy taking a position in a company that has a record for declining revenues. Since FY2011, revenues have declined every year from $107b down to the FY2015 figure of $81b. They've engineered reasonable earnings per share and dividends per share during these years through share buybacks. Share price has come off recent lows because of the "anticipation" of improving revenues as a result of the current business transformation initiative.
I think I'll be a bit more patient on this one and wait until I see a concrete increase in 2 - 3 consecutive quarterly earnings before I commit. I'll end up buying at a much higher price, but I prefer to see some earnings momentum in the right direction first.
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Hi Boring
“I'm just not happy taking a position in a company that has a record for declining revenues” I agree with this. There should be some earning growth. I can still remember IBM was one of the tech stars in the past. When tech companies reach their mature stage, they find hard to increase there earnings growth unless they introduce new product lines and some innovative technology etc.
However, if we can find out any turn around situation, then buying on valuation could bring good results.
I am also not a fan of technology stocks. But Tech stocks can give huge return if we buy them before others. There can be technology that we can understand. We will have to do in-depth research. I am in the process of identifying some emerging tech companies having long term business.
Competition among companies in the tech sector will reduce market share or earnings. Strong competitors will survive and others will go out of business. What types of companies can produce innovative (unique) technology where others cannot enter?
Its 52 week low was around $116 and 52 week high was around $165. It was a very good buy below $130 on the basis of margin of safety. Anybody buying it now should think about future earnings and growth before buying it. However, after sometimes when stock hit some prices, they have potential to go up further in bull markets while having volatility, correction or pull back etc. For some IBM is better buy now. However, intelligent investors bought it when many didn’t want it. Some people are buying for value. It is a sleeping giant. How about any takeover battle?
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Metrics aside, I've been paying increasing attention to the deep learning / artificial intelligence race, which all major tech companies seem to be running in. IBM have consistently been mentioned as leading the charge by developing Watson. Whoever wins this race (Microsoft, IBM, Google, Amazon) will leave the rest in the dust. Good article here http://mwr.nytimes.com/2016/10/17/te...ey-for-it.html
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Big day yesterday for IBM. I have a bunch of these and I am thinking it may not be a bad time to get out while they have spiked. They have some good things going, particularly their blockchain technology but I feel I could probably do better elsewhere.
http://www.marketwatch.com/story/ibm...oks-2017-10-18
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