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Lexmark International

lexmark international 185Year-to-date gains: 48%

As of the most recent look, printer manufacturer Lexmark International (LXK) was up nearly 50% since the end of 2012. Not bad for a company that’s posted two consecutive years of declining revenue, and is en route for a third.

Indeed, had it not been for very good 2010, Lexmark would have posted (and this isn’t a misprint) eight straight years of sliding sales; earnings have largely fallen in step with the deterioration in revenue.

So what, pray tell, could prod such a big run-up in 2013? While the numbers have yet to indicate it, Lexmark is believed by many investors to be in the midst of a plausible turnaround effort that takes it further away from the inkjet business and towards the software and service business.

Though not a high-growth opportunity, software and services is a higher-margin opportunity than the inkjet business, and it should give the company the scalable, reliable revenue opportunity that’s been missing until recently. It’s not a bad business model for increasingly-challenged printer makers.

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