If Your Stock can’t Beat Their Stock
International Business Machines
Corp. (IBM) is on a tear this month hitting a new 52 week high today as
Hewlett-Packard (HPQ) purchases Electronic Data Systems (EDS) in hopes of
making up some ground on Big Blue. HPQ sold off earlier this week on its
announced purchase of EDS but was performing well itself before the
announcement. This should be a good opportunity to purchase HPQ as it moves
from its current price of $46 back up to $49 where it was on Monday.
But the real story is IBM, up from $124
earlier in the month to a new intra-day high today of $128.83. The story today
was work IBM is doing with Research in Motion to provide Web 2.0 technologies
to Blackberry customers. Yet there are many good reasons to be long IBM in a
recovering domestic economy plus the vast foreign businesses that they operate
in.
The $125 and $130 May Calls were
busy today outpacing the Puts by a 10 to 2 ratio in the front month. You could
purchase the stock at this level or purchase some three to four month out Calls.
The stock is prices at 16 trailing earnings with 26% EPS growth, year over
year.
Analysts are expecting more good
news from the developer and manufacturer of information technologies in a wide
assortment of industries. They have raised their expectations for the current
year from 8.22 earnings per share 90 days ago to 8.54 earnings per share in the
most recent week.