Are you a long-term investor, looking to buy a business on the verge of a turnaround? Here’s one company that seems to be ready for that.
The stock is IBM
This is not a trading play.
18-month target: $215
Profit potential: 60%
Here’s how the stock looks on the weekly chart
IBM stock has underperformed for years now. Lots of times, the stock has given hints of turnaround but has failed to do so. Now the stock is rising again in hope of a turnaround under the new CEO. The stock has quietly climbed above 130 and trading sideways. The turnaround breakout looks quite visible on the chart. This is a stock where all the pessimism is baked in the price.
Bullish Argument:
High Growth Cloud computing business (thanks to Red Hat acquisition) – Cloud-computing revenue increased 19% in 2020 to $25.1 billion. IBM is spinning off its Managed Infrastructure services business as a separate standalone company. It means cloud computing business will get higher multiple. The Value unlocking can kickstart the growth in the stock once again. IBM at its current market price offers a 5% dividend yield, which will cap the downside.
Can anything go wrong?
There can always be something that can go wrong. In that case, we will review the stock again and make an exit.
State of BLSH Portfolio
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
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