IBM
Itty Bitty Morons
Back in the day we used to joke that IBM stood for “Itty Bitty Morons” as IBM was caught a bit flat footed by the development of smaller computers and personal computers.
Many people may not have accounted for the cash wealth of IBM which funded the challenge of navigating the personal computer revolution. Although their cash has fallen, they still have nearly twelve billion dollars in cash. They are certainly a “large cap” company with a market capitalization of $272 billion dollars.
They do pay a small dividend yield (about 2.33% per year), so while you won’t get wealthy off IBM dividends, you will get a trickle of cash.
Basic stats I look at are:
Past three month gain of 20.7%
Past year gain of 2.6% (a rather pathetic year)
Past three year gain of 123.1% (recent history is good – roughly 40% per year)
Past five year gain of 125.8% (if we do a simple divide by 5 (not accounting for compounding) we have an average of about 25% per year – I can live with that)
Currently they are sitting at 72% between their one year low and one year high. A bit higher than I’d buy them at now.
As the saying used to go: “Nobody ever got fired for buying IBM”, this might be an excellent conservative stock to own. You won’t get rich, but you should have good long term solid gains.
They do have a history of taking 10% falls but then surge back up even higher. So if you need to sell some, you should have the ability to delay that decision for three months to wait for a good price to sell at.
If we ignore the spike at the beginning of June and factor in a likely 10% fall from the current price of $299, they are probably a good buy at $270 and a downright bargain at $220.
In my opinion, IBM is well worth keeping your eye on to see if you can pick some up at a good price. Perhaps you should add Big Bad IBM to your portfolio?