IBM, INTC, XRX - Trading At Bargain Prices

In an article on TheStreet.com, Gregg Greenberg quotes Kevin Rendino as saying that the shares of IBM (NYSE: IBM), Intel (NASDAQ: INTC) and Xerox (NYSE: XRX) are very attractively valued and prices could rise as firms upgrade their computer systems.

Kevin Rendino, manager of the BlackRock Basic Value Fund, said that IBM was among his favorite stocks because the company has “totally remade themselves around software and services.” From a disc drive and mainframe company, IBM has transformed into a software and services provider. “It’s a consistent grower at more than 10%. They have earnings growth every year and return money to shareholders and do share repurchases. And again, it’s trading at 11 times earnings,” Kevin added.

When asked about INTC, Kevin said a PC refresh cycle is likely to take place in 2010. For the past couple of years, companies have had tight IT budgets. In view of Microsoft (NASDAQ: MSFT) Windows 7, cloud computing and wireless applications convergence, INTC may be a “good stock over the next three to five years,” Kevin elaborated.

Regarding XRX, Kevin said that the highly controversial acquisition of ACS was a good deal. “It's accretive to earnings and accretive to cash flow. The stock trades at 10 times earnings. It's an annuity-based model so 80% of their business is recurring.” Kevin believes that the ACS acquisition is a good long term decision. He added that the deal would boost XRX’s growth rate, and “at 10 times earnings you are not paying for that.”

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