It seems IBM is firing on all cylinders, so why does Tim Seymour prefer other stocks in this sector?
At first glance, Seymour’s commentary seems a little misguided. On Thursday, IBM reported a 4.4% increase in fourth-quarter earnings and provided strong guidance for 2012, helped by its software and services businesses.
The company also said it had benefited from its push toward higher-margin, complex businesses such as business analytics, and away from crowded fields where companies only can compete on price.
“It’s a fantastic company,” admits Seymour, “These guys have been executing on every level."
So why doesn't he like it?
"IBM has been defensive and right now the market is all about rotation. There are much better values in the space.”
Top ranked analyst Brian Marshall of ICI holds the same view. “The stock is priced for perfection. I would not chase the rally," he tells us.
Instead Marshall suggests another stock. I’d look to buy H-P. I think H-P is undervalued here. It only trades at 6 times revenue multiple, and sharp discount to IBM. I have a $34 price target on the stock.”
Trader Joe Terranova is on the other side. “I own IBM and I continue to own it. Their software business is a high margin business. I’m long and willing to buy more. I think IBM goes to $205.”
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NEW SLIDESHOW: The Biggest Momentum Stocks of 2011: Buy or Sell?
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Trader disclosure: On Jan. 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Terranova is long VRTS; Terranova is long IBM; Terranova is long LQD; Terranova is long SU; Terranova is long SJM; Terranova is long JNPR; Terranova is long SBUX; Terranova is long DECK; Terranova is long WFM; Terranova is long OXY; Terranova is long TRLG; Terranova is long CSCO; Terranova is long BRCM; Terranova is long MUB; Terranova is long EMC; Terranova is long AXP; Terranova is long NFLX; Terranova is long F; Terranova is long APC; Terranova is long XOM; Terranova is long STT; P. Najarian is long AAPL; P. Najarian is long BAC calls; P. Najarian is long C; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long MSFT; P. Najarian is long GE; Seymour is long AAPL; Seymour is long BAC; Seymour is long MSFT;
Adami owns C; Adami owns GS; Adami owns INTC; Adami owns AGU; Adami owns MSFT; J. Najarian owns AAPL; J. Najarian owns AKS; J. Najarian owns GS; J. Najarian owns NFLX; J. Najarian owns CDR; J. Najarian owns JNPR; J. Najarian owns EBAY; J. Najarian owns MSFT; J. Najarian owns KBH; J. Najarian owns XHB; J. Najarian is long INTC calls; J. Najarian is long GOOG calls and puts
For Mike Khouw
No disclosures
For Brian Marshall
No disclosures
For Greg Abella
No disclosures
For Dan Berenbaum (NS)
INTEL (INTC): The Primary Analyst also certifies that there has not been, is not, and will not be direct or indirect compensation from MKM Partners LLC or the subject company(ies) related to the specific recommendations or views in this report.
For Jason Helfstein
Oppenheimer & Co. Inc. makes a market in the securities of GOOG.
CNBC.com with wires.