4-Star Stocks Poised to Pop: IBM

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, global IT solutions giant International Business Machines (NYSE: IBM) has earned a respected four-star ranking.

With that in mind, let's take a closer look at IBM's business and see what CAPS investors are saying about the stock right now.

IBM facts

Headquarters (founded)Armonk, N.Y. (1910)
Market Cap$239.8 billion
IndustryIT consulting and other services
Trailing-12-Month Revenue$106.1 billion
ManagementCEO Virginia Rometty (since January 2012)
CFO Mark Loughridge (since July 2010)
Return on Capital (average, past 3 years)26%
Cash/Debt$11.2 billion / $32.4 billion
Dividend Yield1.6%
CompetitorsAccenture
Hewlett-Packard
Microsoft

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 91% of the 4,633 members who have rated IBM believe the stock will outperform the S&P 500 going forward.

Just last month, one of those Fools, JohnCLeven, succinctly summed up the bull case for our community:

IBM is a wonderful, consistent company at a fair price. My only concern is the [long-term] durability of IBM's moat due to being a tech company. Looks great for the medium term at least.

Quality
5 yr avg ROIC 18.7%, 5 yr avg ROE 59% ... [free cash flow]/sales% 15% (cash king). ... Reasonable debt level. [Dividend yield] around 1.6%

Valuation
14x FCF, 14x P/E ...

I'm conservatively forecasting 12%-15% compounded returns, including reinvested dividends for the next 2-5 years. I got a feeling the S&P ain't gonna keep up with that.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, IBM may not be your top choice.

We've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2012." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow theTrackPoisedToCAPS account.

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