Rick Pendergraft's Avatar
published in Blogs
Oct 31, 2018

IBM Approaching Critical Support Level

Over the last five weeks, International Business Machines (NYSE: IBM) has dropped 23% thanks to a disappointing earnings report and the announcement that it is buying cloud-software firm Red Hat (NYSE: RHT).

The sharp drop has the stock within reach of a critical support level. IBM fell from early 2013 through the beginning of 2016. When that bearish phase ended, the stock seemed to find support in the $110 area as the stock bounced around the level for three weeks before reversing upward.

Prior to the lows in 2016, you would have to go back to 2010 in order to see IBM trading below the $110 level.

At this point, value investors and dividend investors alike have to be looking at IBM. The yield for IBM has jumped to over 5% thanks to the price decline and the recently announced dividend of $1.57 per quarter.

Earnings for the last four quarters have totaled $14.09 and given the current price, the P/E ratio is at approximately 8.25. It isn’t very often you see an established company like IBM trading at a P/E ratio under 10 and offering a 5% yield.

In addition to the news about IBM buying Red Hat earlier this week, the company announced on Tuesday that the board has approved an additional $4 billion in its stock buyback plan. This should also be a point of attraction to value investors as the float is being lowered.

The two biggest concerns I have about IBM right now are the stagnant sales and earnings, and the possibility that the company is overpaying for Red Hat. Over the last three years, IBM’s earnings have declined by an average of 2% per year and sales have declined at a rate of 1% per year.

Red Hat should be able to help with the earnings and sales growth as it has averaged earnings growth of 23% per year over the last three years, while sales have increased at a rate of 19%.

My concern is the fact that IBM is buying Red Hat for $34 billion and that amounts to $190 a share. The deal was announced on Sunday, October 28 and the Red Hat’s stock closed at $116.68 on Friday, October 26. That is a premium of almost 63%.

Like I stated before, value investors and dividend investors should potentially give consideration IBM if they don’t own the stock already. A P/E ratio below 10 and a 5% yield are hard to come by. For growth investors, having Red Hat in the mix has to be appealing for the possible growth it can add to IBM’s top and bottom lines.

For me, I would consider buying at the current level with a drop below $105 as a stop. The other possibility is to wait and see if the stock drops to the $110 level and then try to pick it up there. If I did that, I would use a move below $100 as a stop.

Related Ticker: IBM

IBM in upward trend: price rose above 50-day moving average on May 17, 2023

IBM moved above its 50-day moving average on May 17, 2023 date and that indicates a change from a downward trend to an upward trend. In of 39 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on May 17, 2023. You may want to consider a long position or call options on IBM as a result. In of 81 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for IBM just turned positive on May 15, 2023. Looking at past instances where IBM's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .

The 10-day moving average for IBM crossed bullishly above the 50-day moving average on May 25, 2023. This indicates that the trend has shifted higher and could be considered a buy signal. In of 17 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where IBM advanced for three days, in of 328 cases, the price rose further within the following month. The odds of a continued upward trend are .

Bearish Trend Analysis

The 10-day RSI Indicator for IBM moved out of overbought territory on May 24, 2023. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 similar instances where the indicator moved out of overbought territory. In of the 36 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 8 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where IBM declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

IBM broke above its upper Bollinger Band on May 17, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

The Aroon Indicator for IBM entered a downward trend on May 15, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (5.417) is normal, around the industry mean (3.993). P/E Ratio (57.471) is within average values for comparable stocks, (49.275). Projected Growth (PEG Ratio) (2.140) is also within normal values, averaging (1.486). Dividend Yield (0.051) settles around the average of (0.033) among similar stocks. P/S Ratio (1.946) is also within normal values, averaging (2.701).

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 83, placing this stock slightly better than average.

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. IBM’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

Notable companies

The most notable companies in this group are Accenture PLC (NYSE:ACN), International Business Machines Corp (NYSE:IBM), Xerox Holdings Corp (NASDAQ:XRX), Unisys Corp (NYSE:UIS).

Industry description

The industry, whose total market cap runs into trillions, makes hardware/software that allows data to be stored, retrieved, transmitted, and manipulated on computers. With the ever-increasing relevance of data, the information technology (IT) industry has gained momentous growth over the years, and continues to thrive on innovation. Some of the behemoths in the industry are International Business Machines Corporation, Accenture, and VMware, Inc.

Market Cap

The average market capitalization across the Information Technology Services Industry is 7.04B. The market cap for tickers in the group ranges from 0 to 191.73B. ACN holds the highest valuation in this group at 191.73B. The lowest valued company is ARSC at 0.

High and low price notable news

The average weekly price growth across all stocks in the Information Technology Services Industry was 0%. For the same Industry, the average monthly price growth was 4%, and the average quarterly price growth was -2%. BNXAF experienced the highest price growth at 51%, while HWNI experienced the biggest fall at -26%.

Volume

The average weekly volume growth across all stocks in the Information Technology Services Industry was -11%. For the same stocks of the Industry, the average monthly volume growth was -1% and the average quarterly volume growth was 53%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 37
P/E Growth Rating: 64
Price Growth Rating: 60
SMR Rating: 70
Profit Risk Rating: 82
Seasonality Score: 9 (-100 ... +100)
Sergey Savastiouk's Avatar
published in Blogs
Mar 14, 2023
How to Start Trading Penny Stocks

How to Start Trading Penny Stocks

Penny stocks have long been marginalized within the professional investment community, oftentimes being painted with a broad brush of simply being “too risky.” Leonardo DiCaprio’s depiction of the penny stock peddling conman, Jordan Belfort, in the Wolf of Wall Street certainly didn’t help.Here are four reasons to start trading them now. Reason #1: Let’s State the Obvious -- Penny Stocks are Cheap A single share of Apple Inc. costs over $350.
Dmitry Perepelkin's Avatar
published in Blogs
Mar 14, 2023
5 Habits that Lead to Successful Investing

5 Habits that Lead to Successful Investing

To consistently make money in this industry, you need emotional fortitude, an analytical mind, and a willingness to self-reflect. Despite trading and investing being two different activities, these principles can be applied to both.Conversely, investors with good habits often become great traders.  Rather than full sentences for titles, we’ve labeled each of our top-five investing habits using a single word principle.
Allana's Avatar
published in Blogs
Mar 23, 2023
What’s the Difference Between Data Analytics and Machine Learning?

What’s the Difference Between Data Analytics and Machine Learning?

Artificial intelligence (AI) technology is developing rapidly.Data mining can deliver raw numbers, but it does not necessarily provide actionable insights. Structure is necessary to taking abstract information and extracting commonalities, like averages, ratios, and percentages.
Sergey Savastiouk's Avatar
published in Blogs
Mar 13, 2023
4 Tips for Fast, Effective Stock Analysis

4 Tips for Fast, Effective Stock Analysis

With just a few clicks, an investor can search for individual stocks, categories of stocks, sectors, or investment themes, and then he or she can conduct a full range of technical and fundamental analysis within seconds.All powered by Artificial Intelligence.  Below, we give you 5 tips for fast, effective stock analysis using Tickeron’s Screener.
Sergey Savastiouk's Avatar
published in Blogs
Mar 20, 2023
5 Golden Principles in Investing

5 Golden Principles in Investing

You have enough faith in that stock, based on research, that the return will equal or exceed the investment.  Do unto others.The principles outlined here will ensure that happens.  Principle #1: Diversification Investors can’t be one-dimensional when constructing a portfolio.
John Jacques's Avatar
published in Blogs
Mar 24, 2023
If Hedge Funds are Using AI to Invest, Why Shouldn’t You?

If Hedge Funds are Using AI to Invest, Why Shouldn’t You?

Some of the world’s biggest financial institutions have devoted multi-million dollar budgets to developing algorithms that can find patterns in the market, identify trends, and perform automated trading designed to take advantage of even the smallest price movements. The AI revolution is so big that as it stands today, the world’s five biggest hedge funds all use systems-based approaches to trade financial markets.Indeed, quantitative trading hedge funds now manage $918 billion (according to HFR), which amounts to 30% of the $3 trillion hedge fund industry – a percentage continues to grow with each year that passes.
Sergey Savastiouk's Avatar
published in Blogs
Mar 15, 2023
The five most important Lessons Learned After 10,000 hours of Trading

The five most important Lessons Learned After 10,000 hours of Trading

Ten thousand hours of active trading, broken down into forty-hour weeks, amounts to almost five years. Having surpassed that milestone myself, I now understand why it's significant for any trader's journey. The early years taught me valuable lessons that have shaped my approach to trading. It's a misconception that great traders are born with innate talent. The truth is that it takes years of...
Edward Flores's Avatar
published in Blogs
Mar 12, 2023
What's the Difference Between Tokens and Altcoins?

What's the Difference Between Tokens and Altcoins?

Between their inherently technical nature, multiple varieties and sub-varieties, and endless terminology, cryptocurrency (defined here as digital or virtual currencies that are encrypted using cryptography, powered by the immutable digital ledger known as the blockchain) represents a whole, complex world.All altcoins possess their own blockchain, independent from their source code, that records all transactions of their native coins. Many altcoins are variants, or forks, of Bitcoin that leverage that cryptocurrency’s open-source protocol as the basis.
Edward Flores's Avatar
published in Blogs
Mar 26, 2023
Why it Pays to Invest in Dividend Stocks Over the Long Term

Why it Pays to Invest in Dividend Stocks Over the Long Term

Where smaller, more volatile companies can placate shareholders with higher returns, larger companies often use dividend payouts to entice new investors and hold their existing ones. These low-risk options may not work for every investment approach, but dividend-producing stocks can offer great benefits under the right circumstances – especially for portfolios built for the long-term.Beyond the ability to rely on these semi-regular payouts as an income stream – a strategy favored by retirees – dividends are an excellent vehicle for compounding earnings through reinvestment.
Edward Flores's Avatar
published in Blogs
Apr 02, 2023
How Artificial Intelligence Can Improve Fintech

How Artificial Intelligence Can Improve Fintech

Artificial intelligence (AI) and fintech have an inherent compatibility that has become clearer as each sector has matured, with recent growth and successes on their own accord bringing new ideas about how they can work together.AI can analyze information at far greater quantities (and far more quickly) than any human, making it a natural fit to help fintech firms streamline and automate processes that benefit customers and businesses alike. Fintech has brought a revolution of convenience to the finance world.