What’s the best technology stock to hold in 2024? Believe it or not, the answer might not be a Magnificent Seven stock. IBM (NYSE:IBM) stock is my secret pick that has something special for growth-focused traders, value seekers and anyone looking for a passive-income opportunity.
Indeed, this could be the year’s best pound-for-pound, all-around stock pick that hardly anyone talks about. So, keep an open mind as IBM may be an old company but it’s surprisingly modern and poised for substantial growth.
Are IBM Layoffs a Deal Breaker?
First things first: there’s an elephant-in-the room topic that must be addressed, as IBM is following through on a previous promise. Earlier this year, IBM vowed to reduce the size of its workforce.
Now IBM is making good on that promise. Citing a “person with knowledge of the matter,” CNBC reported that IBM is cutting an unspecified number of jobs in the company’s marketing and communications divisions.
Just because IBM is slimming down, this doesn’t mean the company is in trouble. IBM’s fourth-quarter 2023 revenue grew 4% year over year. The company’s quarterly revenue and EPS results beat Wall Street’s consensus estimates.
Besides, IBM is in transformation mode as the company rebrands itself into a premier artificial intelligence technology provider.
IBM’s Watsonx product helps businesses develop AI models, and the company even built an AI-enabled “supercomputer” in the cloud.
It’s Not Too Late to Pick Up IBM Stock
Clearly, IBM’s layoffs shouldn’t be a major cause for concern. Some value-conscious investors might wonder whether IBM might be too richly valued after an impressive share-price rally.
Just relax and don’t worry about being too late with IBM stock. Sure, the stock is rallying this year so far, but IBM is far from over-valued.
In fact, IBM’s GAAP trailing 12-month price-to-earnings ratio is 23.42x. That’s definitely lower than the P/E ratios of some Magnificent Seven members.
In addition, passive-income seekers should check out IBM stock, as the company offers a forward annual dividend yield of 3.46%. You’d be hard-pressed to find a Magnificent Seven company that offers a higher annual dividend yield than that.
IBM Stock: The Perfect Combination of Growth, Value and Yield
IBM isn’t a Magnificent Seven member, but maybe it ought to be. After all, IBM offers a truly magnificent combination of AI-market exposure, share-price appreciation, good value and generous dividend payments.
If you’re worried about IBM’s layoffs, don’t fret. There’s no compelling evidence that the company is a sinking ship. IBM is just slimming down, which many technology firms are doing nowadays.
So, consider looking outside of the so-called Mag-7 for premium tech-sector participation in 2024. With IBM stock, you’ll get everything an investor could possibly ask for: an undiscovered pick to store in your portfolio for years.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
