Pair Trade: IBM vs. AMZN

Much has been made of the recent rotation away from former high-flyers and toward value, particularly in tech. On Monday, Cisco Systems, Intel, and IBM were all up despite the thrashing suffered by tech in general. Those companies have forward price-earnings ratios of 11, 13, and 10, respectively.

One way to trade this phenomenon is to match up two stocks that are on opposite ends of this spectrum. The idea is to enter a long position that will outperform a corresponding short position regardless of market direction. Based on the charts, the most compelling matchup in tech features IBM (IBM) vs. (AMZN)....431 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.