IBM No Longer Overpriced – Buy Now

IBM (NYSE:IBM) — “Big Blue” is the bluest of the blue-chip technology stocks. Its global capabilities in information technology, software, computer hardware and related financing make it a household name. It is a company that is in full maturity, so future growth is expected to result from strong trends in emerging markets and improved profitability in its more developed markets. Earnings for 2012 are estimated to increase to $14.91, up from $13.40.

Technically IBM had been advancing in a bull channel, but upside breaks have been followed by sharp corrections.

On Dec. 13, the Trade of the Day commented that revenues are expected to rise 3.5% in 2012 versus 7.5% this year, and “thus IBM may be somewhat overpriced at $192.”

I went on to say, “Owners of IBM should consider writing options on the stock, and those thinking of investing should wait for a pullback to under $180.”

Now at $181.47, and with an intraday low under $180, IBM is so close to our buy point that it should be bought at the current price. The trading target for the stock is $195, but it could rise to over $220 in 2012.