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I feel IBM is a core holding in my portfolio and based on its track record over the last twenty years it looks like a bargain to me at current levels. Revenue growth has slowed recently but between stock buybacks and growing higher margin parts of the business the earnings are projected to grow 10% per year over the next 5 years. With a current PE of just 11, I think its a great value.
Here are the historical growth rates over a few periods (numbers from fastgraphs).
20YR EPS = 20.2%
20YR DG = 9.0%
15YR EPS = 11.2%
15YR DG = 15.7%
10YR EPS = 13.9%
10YR DG = 19.2%
5YR EPS = 15.1%
5YR DG = 17.2%
With earnings expected to grow at 10% going forward and dividends likely to as well, I think the stock will do fine over the long run.
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I agree with the above assessment of IBM as a business, and am long in the company.
But on a more speculative note, I believe when they get Watson sorted out- it will be the beginning of 21st century computing.
And I think their power8 chip could give Intel's Xeon processors a run for their money.
Ronn
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Made a trade today.
Sold out of my GPC position for a 21% gain.
Bought GME at $38.49.
GPC appears moderately overvalued according to FAST Graphs with a 19.9 PE vs. a 10 year average PE of 16.6.
GME recently announced a 20% increase to the dividend, which boosted the payout to $1.32 and a yield of 3.4%. The company is trading at a PE of just 11.6, has zero debt, and $650M in cash with a market cap of just $4.45B. Also generates significant cash flow and has authorized a stock buyback worth about 10% of the market cap.
Analysts project earnings to increase by greater than 10% annually over the next 5 years, which is great considering its current low valuation.
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Eric, that sounds like an interesting company. It's been around for quite a while but it was never on my radar. I guess because, as an old fart, I automatically dismissed any gaming company.
What do you think their secret is that didn't cause them to implode like many other game retailers?
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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I took a quick look at GME. Not interested. Too many questions that need answers.
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I haven't played video games since I majored in Madden 93 back in college. I was wondering if you feel like gamestop's business model will be around in ten years. I feel like gaming will shift to online subscriptions but maybe they are in that market as well. This could be the replacement for Hasbro that I have been looking for.