Two Stocks in Focus: IBM and L3Harris

When IBM (IBM) posted solid second-quarter results, the stock lost its uptrend. Shares peaked at $296.16 and ended at $259.72 last Friday, July 25.

IBM posted a 7.6% Y/Y rise in revenue, to $17 billion. It is forecasting revenue to grow by at least 5%. Free cash flow will exceed $13.5 billion. Shareholders are troubled by IBM’s debt continually rising.

IBM’s Red Hat is a growth driver. In addition, demand for Hybrid Cloud is rising. Expect double-digit percentage growth in bookings as IBM realizes opportunities in the virtualization market.

Automation is the second growth catalyst. There, the software added about 3.5 points in growth. Expect Automation demand to accelerate throughout 2025.

Data is a tailwind for IBM’s growth. It is capitalizing on the Generative artificial intelligence momentum. From its inception, it booked $1.5 billion for its software products.

In the military sector, L3Harris (LHX) remains a compelling long-term investment. The company posted a 1.9% Y/Y increase in revenue, to $5.4 billion. Orders totalled $8.3 billion, while book-to-bill was 1.5 times.

For 2026, L3 raised its revenue guidance by $200 million. For 2026, expect it to meet revenue targets of $23 billion. L3Harris has a strong footprint in the European markets. This should help sustain margins.

Rocketdyne is another growth engine, enjoying strong momentum.

Wait for LHX stock to dip before building on a long-term position.