IBM Common Stock (IBM)

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.

Doing a lot of financial engineering to sort of prop up the numbers without a lot of growth. With any mature technology company, it is a challenge they all have. Once they go through that mature growth cycle, the question is how to bring on the next growth engine, which they are trying to do with cloud computing. The problem is that the base is so big it is difficult to impact the growth rate. There is definitely hope and they have good products. It’ll take a little while.

This company has no growth. Top line growth is minimal. For years they have been able to grow their bottom line by buying back stock and using their cash flow to do that. Their service offering is becoming more cloud-based, and they are trying to make that transition. If we get into a major correction, this will probably hold up well because it is a defensive name. Trades at a low multiple, but that is because there is no growth.

It is really tough. They are trying, but have not been successful in turning around the revenue declines over the past little while.

Starting to think this is looking a little attractive but would like to see it a little lower. Have a very, very strong balance sheet with a global suite of operations. They generally improve their dividend and do share buybacks. If you hold for a long period of time, you will make some money. It was very lofty at $192, but is now a little more reasonable. There is going to be some restructuring going on, so you are going to have to work through that. $130 is a Buy.

It has not been a pretty picture for IBM. 8% revenue decline over the last quarter.

Doesn’t like this one. Has been around for years and, early on, was a very innovative company. There is a perception that over the last 5 years, they have not really innovated. Instead, they have taken their cash flow and just bought back their own stock. As a result, they haven’t invested in R&D and new products the way they should have. In the last several quarters, the company has largely disappointed on earnings and growth outlook. A very big ship and is not going to be easy to turn around.

Has been one of the worst performers in the market in 2014, but feels it might be coming into its own in 2015. A lot of people are talking about how “old tech” is making a resurgence. This is one that he is quite positive on.