Stocks to Sell: IBM (IBM)
IBM (IBM) remains at the top of many buy lists, but I think the name is there simply because of the name. Legendary investor Warren Buffet, owns IBM stock and has even increased his stake in Q1. IBM stock used to be the brand name in computing technology before it started faltering some twenty years ago, downsizing drastically.
IBM is the classic example of a company that sat on its laurels and was slow to innovate. Perhaps it figured that, as long as Microsoft (MSFT) dominated the operating system software market, people would always buy IBM computers. So everyone else became the experts in mobile and cloud, and IBM stock lingered in the slow lane while other companies zoomed past.
Bulls point to IBM’s new initiatives like Watson and cloud, but what I see are revenues that are declining year-over-year, in turn creating a decline in operating and net income. This is a no-growth company. There’s no reason to invest in it, not with a dividend at only 2.4%.
IBM stock isn’t going away. It still generates $100 billion in sales and low eight figures in free cash flow. But it isn’t at the forefront of technology anymore. There are better places to invest your money. Sell.