While the bull market continues – led by a variety of tech operators like Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), and Netflix (NASDAQ:NFLX) – IBM (NYSE:IBM) stock has been left out of the party. Actually, during the past five years, it has severely underperformed the indexes. For this period, the average annual return on IBM stock was a horrible -1.95%.

The company has certainly been trying to improve things. Yet none of its initiatives seems to get enough momentum to get the attention of investors.

So what now? Is IBM stock hopeless? Well, in light of the company’s track record, that does seem like a reasonable conclusion.

IBM Stock Has Potential

But I still think it has potential. Let’s face it: old-line tech giants like Microsoft (NASDAQ:MSFT) and Adobe (NASDAQ:ADBE) have demonstrated that there are growth opportunities which can be exploited. For the most part, those companies have grown by aggressively utilizing next-generation technologies, such as cloud computing.

And as for IBM stock, I think there could be a similar story brewing. Keep in mind that the company remains committed to heavy investments in research and development. For the first half of this year, it spent $2.8 billion on R&D.

IBM has also amassed a strong intellectual property portfolio. In 2017, it received over 9,000 patents, ranking first in that category for the 25th consecutive year. Many of those patents are in hot areas like artificial intelligence, self-driving cars, and blockchain technology.

Of course, to be effective, IBM needs to commercialize its innovations. After all, it does not help if IBM is creating cool innovations without a business model, right?

Finding Ways to Monetize

Definitely. But IBM has been demonstrating that it is finding ways to monetize its creations. Just look at its latest earnings report. For the trailing 12 months, IBM’s Strategic Imperatives – which include cloud computing, security, analytics, Big Data and mobile – generated $39 billion, or about 48% of total revenues. In fact, the cloud is a hefty $18.5 billion business for IBM, and the annual run rate of its as-a-service business was over $11 billion. So as the Strategic Imperatives get larger and larger, they should help boost IBM’s top line.

IBM’s Key Advantages

Consider that IBM has the key advantages needed to be a marque player in AI and cloud computing. The company controls worldwide infrastructure, which includes 58 cloud data centers across 19 countries, and it manages mission-critical operations for thousands of large customers. Note that IBM is actually the world’s third largest software company, behind Microsoft and Oracle (NYSE:ORCL).

Even IBM’s mainframe business is critical. That technology has become ideal for transaction-intensive operations, including AI.

And finally, IBM’s investments in blockchain look promising. Blockchain, which emerged during the financial crisis, is based on a highly secure ledger system which has been incorporated into the bitcoin cryptocurrency. But over the years, it has also been effectively used to create decentralized databases.

As for IBM, it has made some important strides in high tech. In partnership with Maersk, it has launched TradeLens, which tracks transactions across the supply chain. IBM has also developed LedgerConnect, a system for large financial institutions. Its partners on that project include Barclays (NYSE:BCS) and Citigroup (NYSE:C).

Bottom Line on IBM Stock

It’s true that IBM has transformed too slowly. Then again, it is always difficult to change a massive organization. Another issue is that a large portion of the company’s systems had been fairly old.

But the IBM stock price already is factoring in much of that, as its forward price-earnings ratio stands at only 11. And the dividend yield of IBM stock is an attractive 4.23%. That is one of the highest dividend yields in the tech industry.

So in light of IBM’s restructuring and its focus on up-and-coming categories, IBM is definitely positioning itself nicely, and IBM stock does provide an interesting value opportunity for investors, given the bargain valuation of the IBM stock price.

Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.