International Business Machines Corp.

INTERNATIONAL BUSINESS MACHINES CORP. $160 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $192.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.ibm.com) has moved down from its all-time high of $167.72 in March 2011. That’s mainly because of the earthquake and tsunami in Japan. IBM gets 11% of its sales from Japan, so sales of mainframe computers and services to Japanese customers will suffer while the country rebuilds. However, strong demand in China and other emerging markets, like Russia and Brazil, should offset any drop in Japanese sales. By 2015, IBM feels these markets will supply 30% of its overall revenue. IBM is still a buy.

INTERNATIONAL BUSINESS MACHINES CORP., $162.43, New York symbol IBM, hit a new all-time high of $167.72 this week after the company confirmed its goal to double its earnings and add $20 billion to its annual sales of $100 billion by 2015. A big part of this growth will come from new technologies like “cloud computing” That’s where data and software are kept on one or more centralized servers. Users connect to these servers over the Internet through a variety of devices. IBM feels that cloud-computing services will generate annual revenue of $7 billion by 2015. The company’s strong reputation and new products will also help it expand in fast-growing markets, such as China, India and Brazil. By 2015, IBM feels these markets will supply 30% of its overall revenue....

INTERNATIONAL BUSINESS MACHINES CORP. $161 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.2 billion; Market cap: $193.2 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.6%; TSINetwork Rating: Above Average; www.ibm.com) is the world’s biggest computer company. In the past few years, IBM has shifted its focus from making computers to designing computer systems and managing them on behalf of clients. The company now gets 55% of its revenue and 40% of its earnings from computer services. IBM earned $14.8 billion in 2010. That’s up 10.5% from $13.4 billion in 2009. The company spent $15.4 billion on share buybacks in 2010. Because of fewer shares outstanding, earnings per share rose 15.1%, to $11.52 from $10.01. Revenue rose 4.3% in 2010, to $99.9 billion from $95.8 billion in 2009. The company signed $22.1 billion of new service contracts in the fourth quarter of 2010. That’s up 18% from a year earlier. On December 31, 2010, IBM’s order backlog was $142 billion, or 1.4 times its annual revenue....

When we’re picking stocks to recommend in our newsletters, including Wall Street Stock Forecaster, our publication for conservative investing in U.S. stocks, we like to see companies that benefit from steady revenue streams from high-quality assets, long-term contracts or other reliable sources. That’s because this type of revenue helps cut a stock’s risk. It also cuts its exposure to the ups and downs of the economic cycle.

Conservative investing: Shift toward services has helped this former “Stock of the Year”

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PLEASE NOTE: In next week’s Wall Street Stock Forecaster Hotline, we’ll reveal our #1 U.S. pick for 2011. INTERNATIONAL BUSINESS MACHINES CORP., $155.50, New York symbol IBM, reported better-than-expected earnings this week, thanks to rising demand for its mainframe computers, software and computer services. The company earned $14.8 billion in 2010. That’s up 10.5% from $13.4 billion in 2009. IBM spent $15.4 billion on share buybacks in 2010. Because of fewer shares outstanding, earnings per share rose 15.1%, to $11.52 from $10.01. That beat the consensus earnings estimate of $11.44 a share....

BROADRIDGE FINANCIAL SOLUTIONS INC. $22 (New York symbol BR; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 125.0 million; Market cap: $2.8 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.7%; TSINetwork Rating: Average; www.broadridge.com) provides communication, processing and other services to the investment industry. These services help its customers cut costs and focus on their core businesses. Broadridge’s clients include 250 banks, 500 mutual-fund families and over 5,000 publicly traded companies. The company gets roughly 75% of its revenue from its Investor Communication Solutions division, which distributes proxy materials, including ballots, to investors in stocks and mutual funds. It then counts the votes. Broadridge’s ProxyEdge software helps centralize and simplify shareholder voting, particularly if a meeting involves multiple ballots. Broadridge mails and processes two-thirds of all proxy votes in the U.S....

Broadridge began trading on April 2, 2007, after former parent Automatic Data Processing Inc. (ADP) distributed its shares to its own stockholders as a special dividend, or “spinoff.” Like many spinoffs, Broadridge struggled at first. That’s partly because many ADP shareholders quickly sold their new shares. As well, institutional investors often ignore companies with smaller market caps (or the total value of shares outstanding). Broadridge later went into a deep slump over fears of big losses at its securities-clearing division during the 2008 credit crisis. However, as we’ve often pointed out, most spinoffs go on to produce above-average results over a period of years. Broadridge has rebounded strongly, partly because it decided to focus on helping companies communicate with their shareholders, which is less risky than securities clearing. Plus, it is using its improving earnings to buy other related firms and assets that will pay off for years to come....

INTERNATIONAL BUSINESS MACHINES CORP., $139.67, New York symbol IBM, reported better-than-expected earnings this week, thanks to rising demand for its mainframe computers, software and computer services. In the three months ended September 30, 2010, IBM’s earnings rose 11.7%, to $3.6 billion from $3.2 billion a year earlier. Earnings per share rose 17.5%, to $2.82 from $2.40, on fewer shares outstanding. The latest earnings beat the consensus earnings estimate of $2.76 a share. Revenue rose 3.0% in the quarter, to $24.3 billion from $23.6 billion. That was just above the consensus revenue estimate of $24.2 billion. IBM gets about two-thirds of its revenue from overseas customers. If you exclude the negative impact of currency exchange rates, revenue would have risen 4%....

INTERNATIONAL BUSINESS MACHINES CORP. $133 has agreed to buy Netezza Corp. (New York symbol NZ), whose technology helps businesses quickly analyze sales and other customer data. This helps Netezza’s clients make better decisions. IBM will pay $1.7 billion for Netezza when the deal closes later this year; on June 30, 2010, IBM held cash of $12.2 billion. Best Buy. DUN & BRADSTREET CORP. $72 has bought full control of its Australian credit-rating business. The $205 million-price is equal to 71% of the $288.7 million, or $5.42 a share, that Dun & Bradstreet earned in 2009. This move will help the company profit from rising demand for reliable credit ratings in the Asia-Pacific region. Buy. SNAP-ON INC. $46 earned $0.78 a share in the three months ended June 30, 2010, up 20.0% from $0.65 a year earlier. Revenue rose 9.8%. Demand for Snap-On’s automotive tools continues to rise as the improving economy spurs car sales. Buy.

INTERNATIONAL BUSINESS MACHINES CORP. $125 (New York symbol IBM, Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.3 billion; Market cap: $162.5 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.1%; WSSF Rating: Above Average) continues to expand its software business, mostly through acquisitions. The company’s latest purchase is Unica Corp. (Nasdaq symbol UNCA). Unica’s software analyzes customer buying preferences. That helps its clients design better advertising campaigns. IBM will pay $480 million for Unica when the deal closes by the end of 2010. The company can easily afford this purchase: it held cash of $12.2 billion, or $9.71 a share, on June 30, 2010....