International Business Machines (NYSE:IBM)
Is it a good time to buy IBM?
The stock is cheap, trading at less than 10 times the earnings when the industry average is around 40. And, IBM's price to sales ratio is at 1.68, whereas the computer hardware industry's price to sales ratio is at 23.8.
I like to look at charts to see where the key support prices are. That gives me an idea of what the IBM stock has done in the past during similar price declines. IBM stock started to rally when there was a similar decline as the current decline in 2012 to 2013. Based on the Dylan Wave Theory and fundamental information, buying IBM stock between $130 and $135 is a good strategy.
IBM is focused on long-term growth goals, and these goals should start to pay off soon. For example, IBM's artificial intelligence computing system Watson requires training the system, a process that can take years. Watson is being used in a variety of industries, including healthcare and finance.
IBM’s dividend yields are an attractive 3.71%, and if the stock appreciates $40 in value that will be an impressive 32% gain.
The company has huge cash flow, and its Global Business Services (GBS) had a revenue increase of $8 billion. It has a service backlog of $121 billion, which is up 1% adjusting for currency.
One of the biggest issues for the company in 2015 was a strengthening US dollar. IBM is a global company, and the strength of the U.S. dollar has translated into fewer U.S. dollars over the course of the year. There are signs that the dollar is weakening, so without doing much IBM earnings should go up.
IBM continues to invest heavily in its profitable units, and at the same time turning around the non-profitable units. I think IBM’s strategy of long-term thinking is about to pay off with at least a 32% gain when the stock rallies $40.