Technology stocks have led the market lower this year. Why? Primarily because they either didn’t yet have earnings — or they were being sold at a huge multiple to their earnings, observes Mark Skousen, growth stock expert and editor of Home Run Trader.

But not all tech stocks are struggling to make money. And a handful are trading at compelling valuations. One of them is International Business Machines (IBM). “Big Blue” has been a member of the Dow Jones Industrial Average since 1979.

Today, the company helps businesses and governments reconfigure their IT departments for the cloud era. It ensures that technology systems are not only faster and more efficient but also far more secure.

It is focused on blockchain and the industrial internet. And it is the world leader in artificial intelligence (AI). AI enables computers, robots and other connected devices to mimic the perception, learning, problem-solving and decision making of the human mind.

The firm invested billions to create IBM Bluemix, its cloud platform for software developers. This allows businesses to develop and consume cloud services anywhere and from any way to access the cloud, public or private. And three years ago, IBM also bought Red Hat, the world’s leading provider of enterprise open-source solutions.

In the first quarter, revenue rose to $14.2 billion from $13.2 billion a year ago. Income from continuing operations grew 64%, while free cash flow rose to $1.2 billion. The company also raised its dividend for the 27th consecutive year.

Last year alone, IBM acquired 15 companies to strengthen its hybrid cloud and AI capabilities. However, growth was also driven by companies spending more on software, automation and cybersecurity.

Plus, IBM is expanding its fleet of quantum computers, and it will have a state-of-the-art 1,121-qubit quantum computer by next year. This will be one of the most disruptive technologies of all time.

Leading-edge semiconductors are quickly reaching a physical limit. They simply can’t get much tinier. But computers using quantum physics instead of traditional semiconductors have far greater processing power and performance capabilities -- and have the potential to transform everything from technology to health care.

Despite all these exciting developments, IBM sells for just 13 times Wall Street’s consensus earnings estimate for the next 12 months. And it yields 4.7%. No wonder the stock is up nicely this year, while the tech-laden Nasdaq is down nearly 30%. I still see plenty of upside ahead.

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