When Apple’s (NASDAQ:AAPL) Steve Jobs was building the company in the early days, he saw IBM (NYSE:IBM) as a nemesis. He did not respect the company’s technology. He disdained the business tactics. In fact, in his iconic “1984” commercial, Big Blue was essentially portrayed as Big Brother! Still, nothing was safer than IBM stock. That was then.

With Apple hitting $1 trillion in market value recently, Jobs has finally gotten his revenge from beyond the grave. Note that the market value of IBM stock is only about $133 billion.

This reversal is stunning, actually. For decades IBM was the gold standard of the technology industry. The company automated the Social Security system in the 1930s, built the core guidance technology for the Apollo mission to the moon and helped to create the first computer-based airline reservation system.

And besides, how many tech companies have been around for more than 100 years?

Very few.

OK then, so what now? Can IBM get back to greatness? Or are the problems just too tough to solve?

Well, I think there are reasons to be bullish. So let’s take a look:

IBM Stock Advantage: Transformation

The restructuring effort at IBM definitely has been prolonged. But then again, the organization is massive. Perhaps the biggest issue has been a large set of legacy technologies that needed to be retooled or even disposed of.

Yet IBM has made quite a bit of progress. The company’s so-called Strategic Imperatives, which include cloud systems, AI (Artificial Intelligence) and other next-generation technologies, now account for roughly half of revenues. During the last 12 months, they came to $19 billion, up 15%.

As a testament to its emerging innovations, look at IBM’s blockchain business. This involves leveraging the cryptocurrency bitcoin systems to provide a secure ledger of data. To this end, IBM launched LedgerConnect, which is a platform for financial services companies. While still in the early stages, it has nine large firms as pilot users.

Then there is IBM’s alliance with Maersk. These companies have developed a blockchain system called TradeLens that helps manage complex shipping operations. So far, there are over 90 firms signed up.

IBM Stock Advantage: Global Infrastructure

IBM has some major advantages, which would be difficult for many other tech companies to replicate. First of all, the company’s brand is still powerful and trusted.

Additionally, there is the global footprint. Note that there are 58 cloud data centers across 19 countries. It also helps that the platform is diverse, handling both public and on-premise environments. This is certainly attractive for larger customers, which want more control over their data.

Even IBM’s mainframe business has remained critical. If anything, these systems have proven essential for next-generation technologies likes cloud computing and mobile applications because of their ability to crunch massive amounts of data.

Finally, IBM continues to invest heavily in innovation. From year to year, the amounts range from 7% to 8% of total revenues.

IBM Stock Advantage: Valuation And Dividend Yield

IBM stock is trading at an attractive valuation, with the forward price-to-earnings ratio at only 10X. The dividend yield is also attractive at 4.3%. This is particularly high for a tech company. For the most part, the yield should act as a cushion.

But more important, with the ongoing transformation of IBM, the company is starting to get traction with its top-line. And, as seen with other old-line tech operators like Microsoft (NASDAQ:MSFT) and Adobe (NASDAQ:ADBE), there can be juicy returns for investors when there is a sustainable turnaround.

— Tom Taulli

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Source: Investor Place