A couple of weeks ago, I mentioned how I was having much more difficulty in finding investments that presented a good value. I'm a bargain hunter and I like to pick up good companies after they have a hiccup. I feel like Wall Street loves to overreact to these hiccups and I'm happy to capitalize on the opportunity. For months nothing came across my radar as a good deal. I wanted to buy into Twitter’s IPO, but the price got too high... and it has only gotten more expensive from there.
But I did notice a stock that I thought was worth owning SodaStream. The company had a minor revenue miss of 1% and the stock got hammered by 25%. That's the kind of value that I like to jump on.
Last week, I found another stock that I think represents a good value. Was my title sufficiently vague? Good. The company that I'm looking to invest in is elementary, my dear Watson: IBM. IBM has been on my radar for several weeks, ever since they announced they are opening up their Watson artificial intelligence system (combination of hardware and software) to the world. If you are familiar with Watson, it's probably because of how it famously trounced a pair of top Jeopardy contestants in 2011.
In making Watson a commercial product, IBM hopes to bring in a billion dollars by 2018 and $10 billion in revenue in the next ten years (according to this article). That's a really long term bet, and it may never materialize, but if it does, it is going to be good for shareholders. I think this is a move in the right direction.
In the short term, I was able to buy IBM at a bit of discount due to their latest earnings release of poor hardware sales. They still beat earnings projections and carry a P/E of 12, which is low. My hope is that they can navigate this transition without losing too much in the way of earnings which will help the stock grow again.
If nothing else, when
Skynet Watson decides to end the human race, perhaps it will remember this article supporting it and make my demise a quick and painless one. It's worth a shot.
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