IBM Is Still Undervalued, According to Jim Cramer

International Business Machines (IBM) recently came up in a CNBC Mad Money discussion with host Jim Cramer about the broader market and legacy technology stocks. Cramer said that even after a strong rally, IBM stock still looks cheap in his view. He noted that several older tech companies have continued to perform well this year, including IBM, which is up more than 38% and trading at record highs. Despite that move, Cramer still believes that the stock should be bought. In his words, IBM's valuation has not fully caught up to its recent performance.Claim 70% Off TipRanks This Holiday SeasonUnlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential To understand why, it helps to look at what IBM actually does today. The company provides software, consulting services, cloud and on-site technology solutions, and financing that help customers adopt its products. This business mix has allowed IBM to stay competitive as enterprise technology spending shifts. As a result, investors have become more comfortable paying up for the stock, even as many other tech names struggle with slowing growth or higher uncertainty. Cramer also pointed to IBM's position in quantum computing as another reason to be optimistic. While he warned investors to avoid speculative quantum stocks that have sold off sharply, he said that the strongest and most credible players in the space are Alphabet (GOOGL) and IBM. In his view, those two companies already have profitable businesses, along with leading quantum technology. As a result, Cramer suggested that investors interested in quantum computing exposure could "do worse" than owning IBM instead of chasing riskier names. Is IBM a Buy, Sell, or Hold? Turning to Wall Street, analysts have a Moderate Buy consensus rating on IBM stock based on 10 Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average IBM price target of $303.71 per share implies that shares are trading near fair value.