IBM (NYSE:IBM) and GoPro (NASDAQ:GPRO) might appear to be an odd pairing, but these two very different tech stocks share the disdain of investors in recent years. Still, looking forward, does IBM stock or GPRO offer investors a more compelling investment off and on the price chart? Let’s take a closer look at today’s evidence and then decide.
When it comes to investing in risk assets, there are always hazards. Even if that investment is a market heavyweight like Apple (NASDAQ:AAPL), Home Depot (NYSE:HD) or the world’s largest company, Microsoft (NASDAQ:MSFT), there are risks. Shares of Caterpillar (NYSE:CAT) or 3M (NYSE:MMM) are two current testaments to that reality. But IBM stock and GPRO are different—well, at least to long-term shareholders.
While the relationship between these two tech stocks is thin at best, neither IBM nor GoPro has done well for investors in recent years. Sure, shares of action-technology outfit GPRO famously cratered a few years ago and have never come close to recouping its massive loss in shareholder value. But 2019 aside, IBM stock hasn’t exactly been killing it either.
The fact is shares of Big Blue remain nearly 20% beneath and more than six years removed from all-time-highs set in 2013. As such, while there’s much ado about the Dogs of the Dow, this tech stock has been mostly a dog with fleas.
But instead of looking in the rear-view mirror, what opportunities, if any, are in the cards for these two tech stocks? Let’s take a look at what’s going on for both IBM stock and GPRO off and on the price chart.
Tech Stocks No. 1: IBM Stock
As bad as Big Blue’s performance since 2013 has been, shareholders can be thankful for IBM stock’s dividend or conditions would be much worse. Currently, IBM pays out around 4.5% a year. Thank god, right? Sure. But could it finally be time for bulls to buy this tech stock for its capital gains?
Before IBM bears try to paint the company as a has-been that saw its best days when pensions and TV dinners were a thing, think again. From being the only integrated business-ready platform to address a company’s full blockchain network life-cycle to this past year’s aggressive Red Hat acquisition making IBM a growing player in the cloud market, there are catalysts to drive this tech stock higher.
If downtrend resistance and last week’s candlestick high of $147.35 are cleared, IBM stock could rally within the right side of a massive double-bottom corrective base. Given the last few years of woeful relative weakness, the price action could also turn into a period of outperformance. And with earnings out next week, a more bullish future is anticipated to be nearby for IBM stock bulls.
Tech Stocks No. 2: GPRO Stock
The action sports camera and drone manufacturer had an ugly week to begin October. Shares of this tech stock fell 21% after the company surprised investors with a preannouncement warning about its lower full-year sales outlook. Management at GoPro cited a late-stage production delay for the company’s latest camera, the HERO8 Black.
Given GoPro’s track record of disappointments, Wall Street’s reaction to the news wasn’t entirely surprising. Still, there’s reasons to think GPRO stock could be a legitimate turnaround play.
To be clear, revised revenue guidance of 6%-9% growth compared to 2018 and non-GAAP earnings of 30 to 35 cents per share is a disappointment. Investors were forecasting 9%-12% growth and profits of 39 cents. But while growth and profits came up short of expectations, with the color of money still a feature for this tech stock and products anticipated to be on the shelves for the holiday shopping season, there’s reasons to not write GoPro shares off at this point in time.
Technically, GPRO stock also has a potential fifth pivot within the weekly chart’s broadening formation. A completion of a low could turn shares of this tech stock substantially higher towards $8.00 and pattern resistance.
Relative to the September all-time-low of $3.62, I’m watching for GoPro shares to form a weekly candlestick reversal pattern above $3. This would complete the large inverse triangle and have the added support of a double-bottom formation. Should that price action play out, don’t take a picture, buy GPRO stock instead. Better yet, bullish speculators might consider more secure exposure with an intermediate-dated out-of-the-money call spread.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.