INTERNATIONAL BUSINESS MACHINES CORP. $192 - New York symbol IBM

INTERNATIONAL BUSINESS MACHINES CORP. $192 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.0 billion; Market cap: $192.0 billion; Price-to-sales ratio: 2.1; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.ibm.com) continues to benefit from rising demand for cloud-computing services and analytics software, which helps businesses analyze large amounts of data. However, weaker mainframe computer sales are offsetting these gains.

In the three months ended March 31, 2014, IBM earned $2.6 billion, down 21.7% from $3.4 billion a year earlier. The company spent a high $8.2 billion on share buybacks in the latest quarter. Due to fewer shares outstanding, earnings per share fell at a slower pace of 15.3%, to $2.54 from $3.00.

Revenue declined 3.9%, to $22.5 billion from $23.4 billion. IBM gets two-thirds of its revenue from overseas. If you adjust for foreign exchange rates, revenue declined by 1%.

The company expects to earn $18.00 a share for all of 2014, and the stock trades at just 10.7 times that estimate. IBM still predicts that its earnings will rise to at least $20.00 a share in 2015.

IBM is a buy.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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