Is IBM a stock buy at around $117.00, I think so. Consistant growth and aa good buy in price make this an attractive addition to anyone's portfolio.
From Valueline
IBM is off to a good start in 2008. So far, it appears that economic weakness in the U.S. won’t prevent the computing giant from posting good sales and earnings gains. That’s not too surprising, since most of the company’s sales come from outside the U.S.—65% in the first quarter of the year. The weaker dollar also played a big role in the company’s 11% top-line growth. In fact, adjusted for currency, the company’s revenues only increased by 4%. But Big Blue is doing well in the U.S., too. Even in the face of economic difficulties, businesses are willing to spend for products and services, such as IBM provides, that will help them save money and energy, increase security, and manage risk. Importantly, the company booked $12.6 billion of services contracts in the first quarter, and had services backlogs of $118 billion, which augurs well for the future. Factoring in lower pension costs, and a reduced share count, we look for share net to rise some 15%-20% this year. The company appears poised to post further good sales and earnings gains in the years ahead. We think domestic economic weakness will linger into 2009, and European economies aren’t likely to show much strength next year, either. But
IBM is focusing much of its marketing efforts on the fast-growing BRIC (Brazil, Russia, India, and China) markets, and other rapidly expending regions, such as Southeast Asia, Eastern Europe, the Middle East, and Latin America. And the need to decrease energy consumption isn’t likely to disappear, so the company’s products and services to reduce space and energy
requirements are likely to be in demand. What’s more, roughly half of IBM’s revenues are derived from annuity-like sources, such as long-term services contracts, which provides stability to the top and bottom lines. Finally, ongoing cost control efforts should lead to wider margins,
while additional share buybacks ought to further enhance share net. All told, earnings likely will near the $14.00-a-share mark by 2011-2013. IBM shares have a good deal of appeal. They carry high ranks for Timeliness and Safety. What’s more, the issue has attractive 3- to 5-year risk-adjusted total return potential.
George A. Niemond July 11, 2008
2011-13 PROJECTIONS
---------------------------------------------------Ann’l Total
----------------------------Price------- Gain------- Return
High -----------------------240------ (+100%)----- 20%
Low----------------------- 200------ (+70%)------- 15%
From Valueline
IBM is off to a good start in 2008. So far, it appears that economic weakness in the U.S. won’t prevent the computing giant from posting good sales and earnings gains. That’s not too surprising, since most of the company’s sales come from outside the U.S.—65% in the first quarter of the year. The weaker dollar also played a big role in the company’s 11% top-line growth. In fact, adjusted for currency, the company’s revenues only increased by 4%. But Big Blue is doing well in the U.S., too. Even in the face of economic difficulties, businesses are willing to spend for products and services, such as IBM provides, that will help them save money and energy, increase security, and manage risk. Importantly, the company booked $12.6 billion of services contracts in the first quarter, and had services backlogs of $118 billion, which augurs well for the future. Factoring in lower pension costs, and a reduced share count, we look for share net to rise some 15%-20% this year. The company appears poised to post further good sales and earnings gains in the years ahead. We think domestic economic weakness will linger into 2009, and European economies aren’t likely to show much strength next year, either. But
IBM is focusing much of its marketing efforts on the fast-growing BRIC (Brazil, Russia, India, and China) markets, and other rapidly expending regions, such as Southeast Asia, Eastern Europe, the Middle East, and Latin America. And the need to decrease energy consumption isn’t likely to disappear, so the company’s products and services to reduce space and energy
requirements are likely to be in demand. What’s more, roughly half of IBM’s revenues are derived from annuity-like sources, such as long-term services contracts, which provides stability to the top and bottom lines. Finally, ongoing cost control efforts should lead to wider margins,
while additional share buybacks ought to further enhance share net. All told, earnings likely will near the $14.00-a-share mark by 2011-2013. IBM shares have a good deal of appeal. They carry high ranks for Timeliness and Safety. What’s more, the issue has attractive 3- to 5-year risk-adjusted total return potential.
George A. Niemond July 11, 2008
2011-13 PROJECTIONS
---------------------------------------------------Ann’l Total
----------------------------Price------- Gain------- Return
High -----------------------240------ (+100%)----- 20%
Low----------------------- 200------ (+70%)------- 15%
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