The Best and Worst Dow Stocks for the Next 12 Months

26. International Business Machines Corp. (NYSE:IBM)

Upside Potential: 9.0%

Market Cap: $228 billion

Number of Hedge Fund Holders: 60

International Business Machines Corp. (NYSE:IBM) is a technology company that provides integrated consulting, software, and infrastructure solutions by leveraging hybrid cloud and artificial intelligence.

Over the last few years, IBM has tried to refocus its strategic growth in areas such as automation, cybersecurity, and quantum computing. The company is particularly encouraged about hybrid cloud, where it sees as much as a $1.7 trillion global opportunity. It is also making robust progress in quantum computing and currently boasts of deploying more quantum systems than the rest of the world combined. In February, the company gave a long-term revenue growth guidance of 5%, including 10% software revenue growth, which supported the share price performance.

Wamsi Mohan, an analyst at Bank of America Securities, recently corroborated these growth prospects. Despite the macroeconomic challenges, Wamsi reiterated his Buy rating on IBM with a price target of $270 in a report published around April 20. He lauded the company’s strong YTD share price performance and attributed it to its recurring revenue streams and the mission-critical nature of its offerings. Among other drivers for his optimism, he counted strong growth in the software business, strategic acquisitions like HashiCorp, a healthy dividend yield, and the benefits from the Mainframe refresh cycle.