Cheap Tech Stocks: IBM
IBM (IBM) is hardly on a lot of investors’ tech stocks watch list, with a share price that is actually in the red over the last 12 months vs. a roaring bull market for the rest of Wall Street in general and tech stocks in particular.
And the reasons are obvious: Businesses are squeezing profitability out efficiencies instead of growth, and enterprise tech just hasn’t seen the amount of spending some expected.
But in 2014 and 2015, businesses will assuredly begin the upgrade cycle again if they want to actually see organic growth. Furthermore, if the economy continues to mend then the opportunity to hire and expand operations will be more obvious and pressing.
IBM is playing on this cyclical recovery trend, since it is one of the largest enterprise tech plays out there. Only two U.S. tech stocks, Apple (AAPL) and Microsoft (MSFT), record more in annual profits than IBM. And only Apple and Hewlett-Packard (HPQ) record more in annual revenue.
IBM sports a decent 2% yield that is a mere 21% of earnings, and the company has paid a dividend since 1916 so you can have faith this company knows how to pay its shareholders. On top of dividends, a $15 billion stock buyback plan should boost EPS and keep prices firm going forward.