Yahoo Finance Why IBM is back in style for top tech investor
When you think of "under the radar" stocks, an established blue chip wouldn't be the first place you'd look. But International Business Machines (IBM) is where Kim Caughey Forrest, fund manager for value fund - Fort Pitt Capital Total Return (FPCGX) thinks investors should consider.
“We think IBM can move their business into the cloud and more importantly, they can move their clients’ businesses into the cloud.” It’s a strategic play by a company that’s trying to brush away the perception of a ‘tech dinosaur’ – to move away from hardware to software.
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Some traditions are great for investors like IBM raising its quarterly dividend for the 20th straight year, when it reported Q1 earnings. But revenue also declined over the last three years.
Moving into areas like the cloud which are progressive but long term investments. Caughey said they were “buyers in the last dip.” She advises investors looking for an appealing entry point to “maybe put a half position in at this price and wait for a better price on whatever news may be out there that is company specific.”
IBM's attempts at these strategic changes are not easy moves to make. Caughey believes investing in the company hinges a lot on its CEO, Ginni Rometty. “She’s driving the company. Especially at IBM, typically the CEO sets the direction of the company and given her services background, she understands the opportunity that these newer businesses that IBM is in can really drive the whole company forward.”
The fund manager is encouraged by the traction ‘the cloud’ has had so far in 2015. Caughey notes “who better to help a customer move the right data at the right time to the cloud than the very company that helped build the datacenter!”
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