I am reaffirming a positive risk/reward rating for International Business Machines Corporation (NYSE:IBM) based on the company’s increasingly competitive strategic positioning, it’s growth-focused portfolio, and the resulting higher valuation multiple potential. The risk/reward tradeoff is bolstered by IBM trading near strong long-term technical support levels, its discounted valuation, and a well-above average dividend yield of 4.80%.
Risk/Reward Rating: Positive
Since my last report on November 9, 2021, “IBM dons Red Hat for a new era of growth,” IBM has been a leader in the technology space. The stock has returned 20.81%, while the S&P 500 declined by 17.62% and the Nasdaq 100 declined by 31.73%. The outperformance over the past year compared to each index is 38.43% and 52.54%, respectively. IBM is generating extraordinary alpha for investors’ portfolios. The question today: will the outperformance continue and, if so, what are the drivers?