This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

3 Value Ideas Among Underperforming Tech Stocks

Stocks in this article: IBM INTC MSFT

Chris Lau, Kapitall: The Dow Jones Industrial Average is up 17% over a one-year period, so when technology stocks in this index underperform, it should interest value investors. Microsoft ( MSFT ), IBM ( IBM ), and Intel ( INTC ) are performing poorly. Only Microsoft is up in the same period, while IBM and Intel are down for the year. Microsoft could continue to trend lower, while IBM and Intel could reverse course.

​Click on the image below to see data over time. Sourced from Zacks Investment Research.

Microsoft peaked at $36 in July, but closed recently at around $32. The company wants to boost Windows software sales by updating the operating system. Windows 8.1 “Blue” is scheduled to be released in October, 2013. Even though it will be free for Windows 8 owners, the software giant faces a tough time convincing consumers to upgrade their computers. The new Metro interface is most appealing for computers that have a touch screen. Users still on traditional computers that use a mouse and keyboard will likely stay with Windows 7, while buying an Apple iPad tablet or Android tablet device as a secondary mobile tool. 

When support for Windows XP ends in 2014, sales for Windows 8.x might rise, but for now, investors hoping for a quick rebound might be taking profits instead.

IBM is down 13.3% from a 52-week high. Shares lost traction after the company reported quarterly revenue that missed consensus by $450 million. In Q2, IBM earned $3.91 per share on revenue of $24.92 billion. To reduce costs, IBM forced its hardware staff to take a week off with lower pay. Hardware sales at IBM are struggling. Sales for hardware dropped 12% last quarter. Despite the difficulties, the company expects to earn $16.90 per share in fiscal 2013. This implies IBM is valued at a forward P/E below 11, making shares attractive for investors looking for exposure to the tech sector.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,067.61 +37.40 0.21%
S&P 500 2,090.50 +8.62 0.41%
NASDAQ 4,799.8510 +26.3790 0.55%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs