It is the type of rock-solid company your grandparents knew, respected and may have invested their hard-earned money in. Old, reliable stand-by International Business Machines Corporation (IBM) (NYSE:IBM) might be considered a legacy business by younger traders, but IBM stock has built wealth over time for generation after generation.
Really, it is unfair to pigeonhole IBM as a dinosaur. You might be surprised to discover what the company has been up to lately and how it is still making an imprint on the technology market.
For instance, IBM is teaming up with the University of Florida to launch a comprehensive skills program emphasizing artificial intelligence, data science, financial technology and other technologies. Now, does that sound like something a dinosaur would do?
So, we invite you to leave your assumptions at the door and keep an open mind in evaluating IBM as an investable business in 2022. Besides, after delving into the recent financial data, you will undoubtedly find that the company’s value proposition is airtight.
IBM Stock at a Glance
When will IBM stock finally break out of its range? That is the billion-dollar question which will hopefully be answered in the coming weeks.
Frustratingly, the stock has bounced between $106 and $146 since late 2018. The only exception was during the initial onset of the Covid-19 pandemic, but that period of increased volatility didn’t last too long.
When trading for a breakout, the idea is to watch for a breach of the upper boundary with heavy buying volume. So, in this case, a decisive break above $146 could lead to a swift move to the 2013 peak of around $200.
While you are waiting for that to occur, you can collect some sweet dividend distributions. Currently, IBM offers a forward annual dividend yield of around 5% — not too shabby, you must admit.
Meanwhile, value-focused investors may be interested to know that IBM’s trailing 12-month price-to-earnings ratio is just 19.62. This indicates a very reasonable share price, especially for a technology stock in 2022.
Recovery in a Flash
Cyber-attacks are an unfortunate reality in the digital age. It is a phenomenon that businesses in practically all industries have to deal with nowadays.
Shockingly, 46% of surveyed respondents reported experiencing a ransomware attack during the past two years. The average recovery time can last for days or even weeks.
Yet, prepared businesses don’t have to fall victim to tech-savvy hackers and data thieves. IBM has a powerful solution, proving once again that it is not an obsolete company. Just recently, IBM unveiled the FlashSystem Cyber Vault. This is no ordinary flash storage system — far from it.
For one thing, the FlashSystem Cyber Vault can help identify a ransomware attack, but there is more to it than that. It can also actively monitor data in real time, and if there is an attack, the FlashSystem Cyber Vault accelerates your system’s recovery based on validated restore points.
Right-Sized Revenue
Clearly, IBM is ready and willing to test the boundaries of leading-edge technology, including the high-demand field of cyber-security. Yet, the investors have every right to make the age-old demand: “Show me the money!” Without robust revenue and profits, IBM’s top-tier tech won’t mean much on Wall Street.
Thankfully, IBM has its financial house in order. We can just look at the company’s fourth-quarter (Q4) 2021 results for evidence of this.
Year-over-year, IBM’s software revenue was up 8%, consulting revenue advanced 13% and hybrid-cloud revenue rose 16%. Moreover, the company’s total revenue increased 6.5%.
Turning to the bottom line, IBM posted $2.332 billion in Q4 2021 net income. That is a vast improvement over the $1.356 billion recorded in the year-earlier quarter.
The Takeaway on IBM Stock
How many reasons are there to hold IBM stock? You can start with the low valuation, the generous dividend or the strong revenue and profits.
To those reasons, you can add IBM’s ambitious foray into cybersecurity. It all adds up to a persuasive bullish thesis.
Most importantly, the evidence shows that IBM is definitely not an outdated business. As we’ve discovered today, even an old company can advance new ideas and beat the cyber-attackers at their own game.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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