Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
Story Views
Now:
Last hour:
Last 24 hours:
Total:

This World Dominator Is Still One of the Best Investments You Can Make

% of readers think this story is Fact. Add your two cents.


Last November, I told DailyWealth readers why World Dominator IBM was still a “buy” despite recent weakness in share price and earnings.
Since that letter, IBM has gained about 7%. Not bad. That’s about twice the return of the S&P 500 in the same time frame. But for patient, long-term investors, I believe IBM is still one of the best opportunities in the market today.
Here’s why…
IBM has a legacy of reinvention and transformation likely unequaled by any tech company on the planet. That legacy shows up in both where the business is today and where it’s headed in the near future…
Today, IBM is the No. 1 IT-services company in the world. CEO Ginni Rometty quickly described IBM’s dominant, critical position in world commerce in her recent annual letter to IBM shareholders:
We work with 90 percent of the world’s top banks, 9 of the top 10 oil and gas companies, 40 of the top 50 retailers, and 92 of the top 100 health care organizations. IBM systems manage banking, reservations, transportation, retail, trading, and health care systems. Our mainframes alone process 75 percent of the world’s business data.
IBM is also the No. 2 software company in the world, next to Microsoft. For example, IBM dominates the market for “middleware,” the glue that holds other software programs together. Middleware operates behind the scenes, between the operating system and the user interface, performing functions like speech-and-gesture recognition.
IBM reported last Friday that it had a 29.1% middleware market share in 2014, according to a Gartner special report titled, “Market Share: All Software Markets, Worldwide, 2014.” (The 12-page report costs $9,995 from www.gartner.com. This report is meant to be purchased by companies, not individuals.)
IBM’s share is more than double the No. 2 competitor, Oracle (13.8%), and six times the No. 3 competitor, Microsoft (4.9%). It has maintained this dominance for 14 years in a row.
Dominating markets is a good thing, but the essential IT services Rometty lists above aren’t growing like they once did. So IBM is investing in five faster-growing “strategic imperatives”: data, cloud, social, mobile, and security.
By 2018, IBM expects those five areas to generate 40% of its revenue, up from 27% last year and just 15% in 2011.
Remember, major business transformations don’t happen overnight, even for companies a fraction of IBM’s size. And they never happen fast enough to satisfy Wall Street’s quarterly-earnings-obsessed analysts, hedge-fund investors with axes to grind, and other know-nothing investors who can’t distinguish a cash-gushing business from a cash-burning one.
IBM leads cloud services, too. IBM did $7.7 billion in trailing 12-month cloud products and services. That’s up 75% over the previous 12 months. It’s also more than Amazon and Microsoft. Some say IBM is late to the “cloud party.” Amazon might have been there first, but according to revenues, IBM leads the field.
Last week, the company reported first-quarter 2015 results and noted revenue from its five strategic imperatives is up 30% year-over-year. Quarter to quarter, management expects these emerging businesses to keep improving.
If the transformation plays out as management expects, Wall Street analysts will upgrade IBM in their research reports. That could make mutual funds and other large institutional investors want to own the stock, likely pushing its share price higher.
So far, so good, as IBM trades about 15% off its 52-week low. We’ll see where it winds up in the next couple years. We’re in no hurry with IBM. Being in a hurry would reduce our odds of success by making us like everyone else.
Building new, strong, enterprise-class franchises in emerging fields takes time and money. IBM’s slower-growth legacy franchises continue to gush big, recurring, annuity-like revenues, which it can reinvest in the five faster-growing strategic imperatives.
Meanwhile, the number of shares outstanding continues to decline (5% year-over-year in the first quarter) and the dividend continues to rise (up 16% year-over-year).
IBM is a cash-gushing World Dominator in a controversial period of transformation. Right now, it trades for less than 13 times expected 2015 free cash flow. That’s cheap for a cash-gusher like IBM. If people knew it was in fantastic shape, you couldn’t buy it cheaply. But bad news is good for patient, long-term investors in cash-gushing businesses like IBM. Our advice remains the same as it was in November.
Good investing,
Dan Ferris
P.S. IBM is truly one of the few “extreme” values left in today’s market. But one place I’ve been finding some great opportunities is in the beaten-down natural resource space. In fact, I recently told my Extreme Value subscribers about a virtually unknown royalty company that should easily double or even triple from today’s prices. You can learn all about it with a risk-free subscription to my Extreme Value service. Get all the details here. (This does not link to a long video.)


Source: http://www.stansberryresearch.com/dailywealth/2997/this-world-dominator-is-still-one-of-the-best-investments-you-can-make



Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.