Among these names, I prefer a company where the upside does not depend mainly on falling rates or a turnaround going perfectly. IBM already has a relatively clear path: grow higher-margin software, expand Red Hat and convert enterprise AI adoption into recurring revenue and free cash flow.
MRK also has strong fundamentals, but the longer-term Keytruda patent cliff makes pipeline execution especially important. MMM’s margin recovery is encouraging, although sustaining growth after restructuring will be the next test.
I am more cautious on the turnaround group. NKE, BA and HD could have greater upside if conditions improve, but much more has to go right.
For 2027, I would rather own earnings improvement that is already visible than pay today for a recovery that still needs to arrive. IBM would remain my choice as long as software growth and FCF continue to support the AI narrative.
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