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IBM's Board Offers Up Big Clue


Company suggests there's still upside to be had.


Is it wrong that it's only Wednesday and I'm already thinking about the weekend?

Asian stocks got thumped overnight. The Hang Seng and the Nikkei were off 1.84% and 1.35%, respectively. European stocks were lower this morning, too. And here in the US, we're currently trading lower.

Here's what I'm focused on this morning:

International Business Machines (IBM):
Big Blue's board offers a big clue.

According to an IBM press release yesterday:

The board today also authorized $5 billion in additional funds for use in the company's stock repurchase program. IBM said it will repurchase shares on the open market or in private transactions from time to time, depending on market conditions. This amount is in addition to approximately $4.2 billion remaining at the end of September 2009 from a prior authorization.

My thoughts:

1. IBM's shares have smoked this year. And so the fact that the board is giving the nod to possibly buy back shares when it could just sit on the dough is a clue that it thinks there's still upside to be had here under the right conditions.

2. The estimates have been going up for this year and next over the last month or so, and I'm liking what I'm seeing.

3 I mentioned in a piece earlier in the month that if it got back to the low $120s it would look really pretty. Well, guess where we are right now?

I'm liking this company more and more. That said, I'm wary of the overall market and its direction in the near run, so I'm reluctant to jump in with full force.

For my previous take on the company, see Another IBM Earnings Beat.

Limited Brands
I guess maybe it was more of a trick than a treat?

According to a Limited release earlier this week: "October comparable store sales are expected to be in the negative low-to-mid single digits, versus its previous estimate of roughly flat." And apparently lots of underpants out there were in a twist as yesterday the shares got pummeled.

My feel:

I certainly don't think it's the end of the world and perhaps there was a little bit of overreaction to the news. That said, at about 19.3 times this year's estimate, I find it hard come off the bench on this one. I think there are better opportunities out there and so I won't be using this pullback as any reason to jump in.

For my last take on Limited, click here.

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No positions in stocks mentioned.

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