Is IBM a Stock Worth Owning?

In this ugly market, homegamers need to think long-term, Cramer said. That’s why he likes companies with good five-year plans.

All week Cramer’s been highlighting companies with these long-term plans, including Honeywell, 3M, Ford Motor and DuPont. On Friday, he turned to IBM , a mega-cap tech company with “perhaps the best five-year plan of them all.”

The “Mad Money” host said the Armonk, N.Y.-based company’s roadmap is ambitious and achievable.

“IBM is sticking to its knitting as the world’s largest information technology services company and the leader in something called middleware, which is software that works like plumbing between applications on different databases.”

That means it doesn't need a hot new product to make it work.

CEO Sam Palmisano laid out his the plan in May 2010. It calls for IBM to generate $100 billion in free cash flow over five years, returning 70 percent of that to shareholders. While the plan assumes a very slow revenue growth of two to three percent a year, the company intends to grow earnings by 71 percent, from $11.67 last year to $20 by 2015, by shifting towards more high-margin software and acquisitions.

IBM also plans to grow its emerging market sales from 21 percent of sales in 2010 to 30 percent by 2015, and its business analytics division should do $16 billion in sales by 2015.

Not only is IBM's plan "do-able", Cramer said, but its last quarter was terrific and its stock is cheap, trading at just 11.3 times next year’s earnings estimates with an 11 percent long-term growth rate.

That’s why Cramer believes the company is a buy, buy buy.

“If the company hits those targets,” he said, “then this stock is going much, much higher.”

When this story was published, Cramer's charitable trust owned IBM.

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