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By Ian Wyatt, Daily Profit |
Jan 20, 2010 |
On the surface, earnings from IBM (NYSE: IBM) appeared excellent. The technology bellweather posted $3.59 a share in 4th Quarter earnings. That beat analysts’ expectations of $3.47 a share. IBM also beat slightly on revenues.
IBM also said 1st quarter revenues would be higher and even went so far as to raise earnings estimates for all of 2010. So why is the stock down?
Because IBM’s business services division, which includes consulting, reported a 2.8% drop in revenues. Obviously, strength in other divisions more than made up for it. But investors seem fixated on the negative.
Yes, the drumbeat of the skeptics rolls on…
*****Bloomberg quoted a chief investment strategist who said "Market optimism looks excessive..." Frankly, I don’t see it. Seems to me, there are plenty of bears out there calling stocks grossly overvalued and predicting an imminent stock market crash, and return to recession.
Today, the Dow Industrials is down 150 points as I write. But the Dow is still above 10,500. And what if profit-taking sends is down to 10,000? Is that a disaster? I think not…
Stock prices rise and fall. In fact, it is the declines that make room for the advances. I’m sure plenty of analysts and strategists will say this is the beginning of the end. Don’t believe them.
As I wrote yesterday, corporations are generating a huge amount of cash flow right now. And that will have a positive effect on earnings in the quarters to come.
IBM has been a core holding in the Top Stock Insights portfolio. I recommended the stock on August 9, 2009 at $118.51 a share. I have no intention of selling.
*****Today is the day! My latest video investment conference China Inc.: Understanding China for Outstanding Profits airs tonight at 6 pm ET. And there’s just a few seats left.
Chinese stocks have sold off a bit lately, and valuations are looking amazingly attractive. One of my top recommendations, which I discuss in China Inc.: Understanding China for Outstanding Profits, has a trailing P/E of 18, a forward P/E of 9, and a PEG ration of 0.6. This means that earnings for this company are growing twice as fast as the stock’s price appreciation. I think this stock is an easy double waiting to happen. And you can enjoy those gains if you act now.
Use this LINK to reserve your seat for tonight’s presentation of China Inc.: Understanding China for Outstanding Profits. You’ll be glad you did.
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