Friday, April 20, 2012


IBM, trading at about $200 a share lately, is one of the stocks I have liked for some time and still like today.  Their earnings report came out a couple of days ago, showing earnings up 7% and flat revenues. The story is that IBM is transitioning from a hardware company to a business services company, the latter being more profitable.  IBM continues to be successful managing big data and providing IT services to big companies.  It's a fine business and only getting bigger.

Look at the numbers:  IBM has a book value of $17.31 a share, according to Yahoo! Finance, and 2012 earnings are estimated to be $14.92.  That's a fine profit engine, a return on equity of 71%.  The stock pays a $3 dividend and reinvests the rest back in the company, where it will get that nice return.  When I project out the growth for five years, I find an estimated future price of over $1,200 a share, while collecting fifty bucks or so in dividends.  So yeah, I like it: salute to Big Blue.

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