IBM: My Favorite Core Portfolio Holding
TheStreet Premium Services
A complimentary preview
of Options-Profits Previews
IBM will always be a favorite core portfolio holding of mine. Even when it does consolidate and pullback a bit, the healthy dividend rewards you for being patient and the company has cornered the services and analytics markets which are very high-barrier-to-entry. That innovation and vision over a decade ago with the strategy shift is why IBM is on a totally different playing field from the likes of Dell (DELL), Hewlett-Packard (HPQ) and Intel (INTC).
With IBM trading around $214, at the time of writing, does it still represent an attractive entry point? Absolutely. This is one of the most fundamentally sound companies you can own that consistently rewards investors by returning cash and creating shareholder value by investing in key growth areas like services and analytics. I also believe capital expenditures and information-technology spend will gradually get better in the second half of the year, and IBM will continue to benefit from that.
Let's take a look at some data points. IBM's analyst day a couple of weeks ago has provided some significant momentum for shares. I believe that there is upside to management's earnings forecast of $20 a share for 2015, and that focus on analytics, cloud, Smarter Planet and more software-related products will drive this outperformance. Management noted that the analytics segment should contribute $20 billion to 2015 sales, compared with its previous estimate of $16 billion and the $10 billion level seen in 2010. IBM remains one of my favorite core recommendations because of its stability, and I also see upside and improving margins as the firm further expands its software and services segment.
Trade Idea: You could buy the IBM Jul 220/230 call spread for $2.99.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV