With shares of International Business Machines (NYSE:IBM) trading at around $193.42, is IBM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
How can you not love Big Blue? It has been one of the safest investments for decades. It’s also a company that looks out for its shareholders. Share buybacks and increasing dividends are commonplace. In addition to that, Warren Buffet is a big fan. Not everyone likes Mr. Buffet, but you can’t deny his success. If, by the way, you’re wondering why IBM is often referred to as Big Blue, the “Big” relates to its global size, and the “Blue” most likely stems from the 1972 logo, which featured three blue stripes. However, you’re probably more interested in what the future has to hold.
IBM will purchase StoredIQ in Q1 2013. This will allow IBM to develop software that will help manage large loads of data. At the same time, only important data will be kept. Everything else will be deleted. The data will also help identify trends.
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IBM has a successful track record when it comes to acquisitions, two of the most recent being PSS Systems and Vivsimo. IBM won’t stop at StoredIQ, either. IBM will invest up to $20 billion on acquisitions over the next five years. This will help support growth.
Future acquisitions are important, but let’s take a look at some numbers that will help us gage IBM’s progress without those future acquisitions.