Best Stock 2015: IBM

This article is part of the series Top Tech Stocks 2015. Click here to read other installments of this series.

Each December and January, many investors re-balance their portfolios, which means fresh stock ideas are at a premium this time of year.

I've been counting down my five best tech stocks to buy in 2015, and while this century-old behemoth is more disrupted than disruptor, I'm of the mind that enterprise tech heavyweight IBM could produce some interesting returns at today's price.

Here's why.

How low can you go?IBM's relative and absolute valuation is the centerpiece of this investing thesis. As is also the case with Russian search engine Yandex, stockholders have abandoned IBM en masse over the past year, which could create a compelling entry point for value-oriented investors.

IBM data by YCharts.

At least some part of the sell-off is clearly warranted. In the wake of yet another disappointing earnings release last quarter, IBM scrapped its long-stated goal of achieving $20 operating earnings per shares in 2015. This understandably spooked investors who had take it as gospel creed that Big Blue would reach this long-standing goal, myself included. However, after considering the implications of this strategic shift, there is ample evidence to support CEO Ginni Rometty's break with tradition.

To the cloud!Recalling its shift away from the PC businessin the last decade, IBM is once again in full-fledged pivot mode. This time, though, IBM needs to reorient itself away from its traditional hardware, software, and services model toward the computing paradigm that is quickly taking its place -- the cloud.

Perhaps it suffered from the incumbent's dilemma, but IBM was undeniably slow to react to the emergence of corporate cloud computing. Since it was launched in 2006, Amazon.com's Amazon Web Services has grown into the dominant force in cloud computing, controlling an estimated 27% of the market. For context, Microsoft and IBM hold 10% and 7% shares of this market, respectively, while Google has also created a meaningful presence in the space. Now, with so many of technology's elite vying for a piece of this space, not to mention the hoards of smaller cloud services companies, IBM must find a way to elbow its way into the cloud computing era or risk irrelevance.

While it probably comes as small consolation, IBM seems to have finally gotten its act together regarding this business model makeover. It has developed a cohesive game plan and leadership team to help it achieve this monumental task. IBM recently named longtime executive Robert LeBlanc as the new of its IBM cloud division. It has also acquired significant outside talent through targeted acquisitions, such as buying SoftLayer Technologieslast year for $2 billion. Cloud sales are set to rise from $4 billion in 2014 to $7 billion in 2015, although a healthy portion of that $7 billion will represent existing IBM customers simply transitioning from legacy systems to the cloud. However, it's clear IBM has finally seized the initiative, which is notsomething investors could say mere months ago.

How cheap is cheap enough? I certainly don't dispute or take lightly its current predicament. IBM faces some significant challenges that could threaten its very existence. But I also find the notion that IBM is on a one-way train to elimination equally hard to believe. For starters, given the significant infrastructure costs incurred by many of IBM's customers, a short-term mass exodus of customers is unlikely. This isn't the kind of business that can implode overnight, meaning IBM has some time to execute this business model transition. So, given what I'd say is a reasonable beliefthat this critical juncture is unlikely to be the death knell of IBM, is this a buying opportunity?

IBM's current P/E multiple has fallen to just under 11 according to S&P Capital IQ estimates, versus 20 times for the S&P 500. The company's typically low dividend sits at 2.8%, well above the broad market's 1.8% payout. You'd be hard-pressed to find a cheaper high-quality stock at present. I believe IBM will survive its pivot to the cloud. And although it is challenging to envision how the exact economics of IBM's future self will work out, I think its current rock-bottom pricing should provide ample protection for whatever lies ahead.

At the end of the day, this investing narrative comes down to a bet on whether you believe IBM can successfully navigate yet another major business model shift, which isn't a given but is certainly achievable. However, plenty of pessimism is baked into IBM, and a turnaround could handsomely reward investors who were willing to trust that this elephant can still dance.

The article Best Stock 2015: IBM originally appeared on Fool.com.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Google (A shares), Google (C shares), International Business Machines, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.