Billionaire Warren Buffett remains bullish on International Business Machines Corp. (NYSE:IBM) stock, even if the company has been struggling to increase its revenue over the past few years.
During an interview with CNBC’s Squawk Box in May, Buffet said, “We feel fine, or we won’t own it. We’ve never sold a share of IBM. Periodically, we buy a little bit more.” (Source: “Buffett: We’ve ‘never sold a share.
International Business Machines is making huge investments in businesses such as analytics, cloud computing, mobile, and security technologies. The company’s management considers these businesses “strategic imperatives” to help drive growth and profitability.
The company reported that its second-quarter revenues from its strategic imperatives increased 12% year-over-year. Its revenue from cloud computing climbed 30% to $11.6 billion. Its revenue from analytics increased five percent, while mobile revenue grew 43%, and security rose 18%. Even if the company reported that its total revenue declined three percent to $20.2 billion during the period, the performance of its strategic imperatives is impressive. (Source: “IBM Reports 2016 Second-Quarter Earnings,” International Business Machines Corp., July 18, 2016.)
If you are looking to invest in a great company with a strong balance sheet that is currently undervalued, IBM stock is one to consider. The stock is currently trading at around $160.00 per share, which many consider attractive and cheap.
Given its low-level valuation, IBM stock offers investors a substantial opportunity to generate huge returns. Take note that the company’s management is investing heavily in businesses that could deliver superior growth and profitability.