IBM Common Stock (IBM)

Has suffered in recent years, but what they are doing is constantly buying back stock, so they are shrinking their balance sheet as their earnings come down. His model price is $148.94 so still has an upside of 7%.

IBM (IBM-N) or Oracle (ORCL-Q)? Not a fan of either. If looking for a dividend play, this one pays a much nicer one, close to 4% versus 1.5%. Growth rate is pretty weak. Still moving away and facing challenges from moving away from its old school legacy type of slower growth businesses to the faster, trendier things like the Cloud. Technicals don’t look very good for either. Would prefer Microsoft (MSFT-Q).

It has had decelerating revenues for many years. Earnings have held in only because of massive buybacks they do every year. It is a classic value trap. He would switch within the tech sector to something with more growth.

A very good example of old technology versus new technology. It appears cheap from a fundamental level, trading at 9X on a forward basis and 8X on a trailing basis. The growth rate is the issue. There is a lack of confidence that this company can transition from more of its legacy technologies such as software, etc., to more of the analytics, the cloud, mobile and security.

This has been a very big disappointment compared to all the other techs. This is a stock that is looking for direction. At this stage technically, it is still a Sell compared to some of the other names that he would like more. Expects to see a little bit more pullback, maybe $5-$6. This spent some time at the $120 level in 2009-2010 and this is where he would like to see it go to.

Have had trouble in the past few quarters. A great company and have done a fantastic transition 15 years ago. The next transformation has to happen. The law of numbers is against them in that to turn around a ship of that size is very, very difficult. There are far better technology investments that you could own that would result in gains for your portfolio. (See Top Picks.)

Top line revenue growth has been pretty anaemic for years. Share price has been drifting down for most of the last 3 years and have been pretty aggressive in their revenue recognition. This has been in a range for the last 5 years. He would prefer Microsoft (MSFT-Q), which had a pretty good set of numbers recently.

Has been buying back a lot of stock. Tech stocks have not done anything recently. If you are happy with the company and they are eating back stock, you should stick with it. He thinks you will see some activists come in and make them make acquisitions.

They are going through an internal restructuring. They have had declining revenue and earnings. They are buying back shares to keep the earnings per share afloat. They have gone through massive changes over the decades and come out well. He would buy this one if it went to $140.

There is probably better things to invest in. Great dividend yield, but be does not see where the growth comes from. They lost their way and are not sure what they want to do. They will continue to buy back shares and pay their dividend, however. He prefers MSFT-Q and AAPL-Q.

They are having difficulty executing on some of their strategies. Sectors they chose to invest heavily in have had a lot of margin compression. He likes the valuation here, but he feels all rallies will be to a lower high for some time.

Earnings on the revenue side have been soft for almost 3 years or more. It is really a question of how they can turn the ship around and how quickly it can happen. Great CEO. There was a time when this was all hardware, but it is now all software. It’s a question of how they get that service side in. He thinks it will take time. If you want to pick away at it, this is obviously an OK spot, but you have to have a pretty good time horizon and be able to withstand the bumps.

Their debt continues to pile up and essentially have no earnings growth. Earnings growth is coming from share buybacks. Even though it looks cheap on a fundamental basis looking at the guts, stay away from this.

(A Top Pick June 30/14. Down 6.07%.) Had the 2^nd quarter in a row where they had poor numbers, so he sold his holdings in the $190s. Came very close to buying it back at around $150.

This is in transition, but it does have fundamentals. His model price is $200, a 15% upside. Pays a 3% dividend. Even if they disappoint on the top and bottom lines, they know how many shares to buy back to make the whole thing work.