Stock Option Investment Advice

IBM Sees Bright Future and Increases Stock Buyback

IBM has helped inspired strong equities buying the last couple days by announcing a strong outlook for its 2008 earnings as well as an increase in its stock repurchase program. Both of these announcements helping ignite stock trading as they gave the stock help from investors looking to be inspired. The strong earnings come in light of economic uncertainty and the increase stock buyback shows company financial support for the strength of the company’s future.

IBM is expecting earnings per share of $8.25 during 2008. This is slightly higher than the Thomson Financial analyst expectation of $8.22 per share. The company had previously suggested a range from $8.20-8.30.

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IBM expects to spend over $15 billion in stock buybacks this year, adding to the large amount of money the company has invested in repurchase programs since the mid 1990s. Company shares jumped 4% following the announcement and IBM seems well established above $114 per share at the moment.

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Aggressive investors look for a blue chip for their trading portfolio are excited about the near-term and longer-term outlooks for IBM. Along with the earnings estimates for this year, IBM has suggested that by 2010, it could see $11 or more in earnings per share. Analysts seem to think that is a bit high and that a peak of $10.35 is more likely. Regardless, $10.35-11 would be almost double the company’s $6 earnings point during 2006.

One year analyst estimates are for a $123.53 target. The $1.60 annual dividend the company currently offers makes it a great fit for a long-term stock trading strategy. With the strong news bounce by the stock, some investors may use covered calls to take advantage of a potential flat spell for the stock. Covered call investing allows investors long on IBM to use the strong short-term move to collect additional gains on their investment if the stock retraces the bounce and is flat or slightly down in the near-term.

IBMs strong outlook, along with some other blue chip surprises of late, has helped stimulate a recent equity climb. Many stock trading investors look to the big blue chip staples for an indication of overall economic and market direction. The fact that IBM executives are confident in 2008 earnings, willing to buyback stock with strength, and happy to maintain a great dividend for investors are all motivating for the market.

US stocks have actually been rising this week in spite of some troubling inflation and economic data. Many economists are suggesting stagflation is a growing concern. This is situation where inflation (high consumer prices) is combined with a slowing economy. Investors have remained hopeful that no matter how things look now, there will be better times for the back half of 2008. Online trading news has discussed several stocks looking to buybacks, as IBM has, to support stock value to investors.

IBMs guidance, along with some other leaders, has improved sentiments toward tech stocks as of late. Much of the stock research provided by leading analysts has suggested tech should be avoided, but some investors may be seeing things differently. Many individuals have been buying some strong and steady tech stocks to their personal stock portfolio.

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[tags] Thomson Financial, 2008, US, covered call strategies, investing in stock options, personal stock portfolio, poweroptions, stock help, stock investing, stock market help, stock market investment strategies, stock options, stock research, stock trading [/tags]

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