Not all computers have become commoditized in 2013. Mainframe computers are still big business for IBM. High barriers to entry in the mainframe business give IBM a defensible moat against new entrants stealing share, even as economic tailwinds spur mainframe upgrades at major financial, research and communications firms. With a big menu of IT offerings and a hefty customer Rolodex replete with cross-selling opportunities, IBM should continue to do well this year.
Wells Fargo (WFC) hasn't lost its reputation as the best of the big banks. The firm entered the Great Recession in better shape than peers, and it's exited the same with a much less labyrinthine balance sheet. That financial clarity is a very good thing for investors right now.
That doesn't mean that Wells Fargo has been without fault. The firm has made some big missteps in the mortgage market, and for better or worse, Wells is still one of the "too big to fail" banks. But the downturn provided some big opportunities for Wells Fargo, most notably through the 2008 acquisition of beleaguered Wachovia; the purchase doubled WFC's size as well as its profit potential for investors.The Fed has provided an interesting environment for financial services firms. With interest rates scraping along the zero mark, earnings are understated at banks right now. That means that when rates eventually begin to rebound (the most recent Fed minutes point to that possibly starting late this year), profits should balloon. For investors looking for big bank exposure without all the baggage, it's hard to beat Wells Fargo. Now with rising analyst sentiment in the San Francisco-based bank, we're betting on shares. Delphi Automotive Auto parts supplier Delphi Automotive (DLPH) has had anything but a quiet life over the last couple of decades. The firm that started out as General Motors' (GM) parts business went bankrupt a full three years ahead of the Great Recession, only to emerge in late 2009. But now, with the firm's operations and cost structure reworked, the firm is able to stay profitable. Delphi has kept its tight relationship with GM. The firm still generates around 20% of total sales from the Detroit-based automaker, supplying everything from electrical components to safety products to the powertrain modules found in GM's cars. Less attractive is Delphi's exposure to the Eurozone; the firm currently generates close to half of its sales in Europe, a market that continues to be challenged by economic headwinds.
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