Some 20 years ago, I told my Dad that he should buy IBM stock because "it was cheap". I didn't know anything about P/E or cash flows back then; I based my stock valuations from the prices listed in tiny print in the business section of the newspaper. IBM's price was less than almost all other companies, most of which I'd never even heard of! The stock is up over 2,000% since then.
I tell you this because 1) I wish I hadn't spent all my money on baseball cards, and 2) IBM has been around for a while, and will continue to be around for a while. They've led the U.S. Patent Office in patents granted for nearly two decades. If someone asked me "which company is going to bring the holodeck from science-fiction to reality?", IBM would top my short list. (Google and Microsoft would be the others.) It is the best proxy for Information Technology - they don't do one thing great, but they do an awful lot of things very, very well.
International Business Machines (IBM)
Positives:
Safe, growing dividend (1.8%).
Fantastic return on equity (74%).
Warren Buffett likes it.
Negatives:
Huge market cap ($214B).
Net -$22B cash minus debt.
Here's my current portfolio. As always, I believe in all of these stocks - until I sell them.
Apple (AAPL) 16.19%
Google (GOOG) 8.03%
Baidu (BIDU) 6.98%
Southern Copper (SCCO) 6.86%
Intuitive Surgical (ISRG) 5.70%
American Capital Agency (AGNC) 4.56%
Ace Limited (ACE) 4.52%
Annaly Capital Management (NLY) 3.95%
Amazon (AMZN) 3.04%
American Software (AMSWA) 3.02%
Tesla Motors (TSLA) 2.69%
Kinder Morgan Energy Partners (KMP) 2.60%
Apache (APA) 2.33%
Prospect Capital (PSEC) 2.27%
Blackstone (BX) 2.25%
McDonald's (MCD) 2.17%
Vodafone (VOD) 2.11%
Intel (INTC) 2.01%
Under Armour (UA) 1.88%
DuPont (DD) 1.81%
BreitBurn Energy Partners (BBEP) 1.65%
China Mobile (CHL) 1.57%
International Business Machines (IBM) 1.53%
ConocoPhillips (COP) 1.50%
Computer Programs and Systems (CPSI) 1.46%
F5 Networks (FFIV) 1.42%
American Express (AXP) 1.35%
Microsoft (MSFT) 1.28%
Wells Fargo (WFC) 1.26%
The Distressed (BEBE, GSOL, LZB, MSI, PCS, RVR) 1.10%
