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Amazon, Microsoft, Intel and IBM: Why These Stocks Matter

NEW YORK (TheStreet) -- One of my weekly investment chores is to keep an eye on the most widely followed and often-tracked stocks. On Monday it amazed me that (AMZN - Get Report), which has a three-month average daily volume of 2,757,920 shares, traded over four million shares. Yet, other widely held behemoths like Microsoft (MSFT - Get Report), IBM (IBM) and Intel (INTC) weren't garnering anywhere near the average daily volume.

What do all these stocks have in common? Except for Amazon they have been or are in a correction mode. Microsoft (a.k.a. "Mr. Softy") turned around only six weeks ago and traded on Monday to a new 52-week high of $38.78. Again, except for Amazon, IBM and Intel were correcting on sluggish volume.

Amazon and Microsoft have been market darlings before and after our U.S. Thanksgiving holiday. That's partly because they sell a lot of valuable items that holiday shoppers crave. From its Xbox game consoles to its Surface tablets, Microsoft has the earnings generators that investors like, plus the hope that someone more inspiring than Steve Ballmer will lead Microsoft back to its glory days.

Amazon is an anomaly among these four titans because it sells at outrageously high multiples (PE ratio) to its current and forward earnings. Is the stock really worth nearly $400 a share? Even though Amazon finished Monday slightly lower, the volume tells us that people still want to bet on this "racehorse" among online retailers. The other three companies don't get quite the respect or the valuation that Amazon is given. But Microsoft, Intel and IBM have two important qualities that investors are hungrily shopping for.

They pay a dividend: IBM has a 2.14% yield-to price, Intel offers a 3.8% yield and good old Mr. Softy at current levels offers a 2.91% yield. Also, these three are trading at PE ratios that are around 10% below the average PE ratio for the already high S&P 500 index. Microsoft has a forward  PE of about 13, Intel's is about 12.5 and the frequently-shorted IBM has the lowest forward PE ratio of the three at slightly below 10.

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AMZN $671.33 -1.80%
MSFT $49.77 -1.70%
AAPL $95.18 1.64%
FB $117.44 -0.95%
GOOG $692.33 -0.84%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

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