IBM vs Lam Research Which Should You Buy?

IBM and Lam Research are two giants in the technology and semiconductor industries, each with its own unique strengths and challenges. IBM, a long-standing player in the tech industry, has a legacy of innovation and a diversified portfolio of products and services. On the other hand, Lam Research specializes in semiconductor manufacturing equipment, playing a crucial role in the production of cutting-edge technology. Both companies have seen fluctuations in their stock prices in recent years, making them intriguing options for investors looking to capitalize on the rapidly evolving tech landscape.

IBM or Lam Research?

When comparing IBM and Lam Research, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between IBM and Lam Research.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. IBM has a dividend yield of 2.87%, while Lam Research has a dividend yield of 3.52%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. IBM reports a 5-year dividend growth of 1.32% year and a payout ratio of 95.65%. On the other hand, Lam Research reports a 5-year dividend growth of 10.89% year and a payout ratio of 25.87%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with IBM P/E ratio at 33.41 and Lam Research's P/E ratio at 24.21. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. IBM P/B ratio is 8.74 while Lam Research's P/B ratio is 11.59.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, IBM has seen a 5-year revenue growth of -0.22%, while Lam Research's is 1.10%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IBM's ROE at 27.14% and Lam Research's ROE at 48.80%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $230.44 for IBM and $74.95 for Lam Research. Over the past year, IBM's prices ranged from $157.89 to $239.35, with a yearly change of 51.59%. Lam Research's prices fluctuated between $68.87 and $113.00, with a yearly change of 64.08%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.