Both the stock market and computer stocks have been on a bit of a rally since October, amid not only good reports of growth in both revenue and earnings, but also an increase in P/E ratios. Intel (INTC) has been on a good trajectory but seems to have hit some resistance at about the $27 mark. The hourly trading chart provided by Barchart shows how the stock has recently bumped against that invisible ceiling around $27:
Intel Corporation engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in notebooks, netbooks, desktops, servers, workstations, storage products, embedded applications, communications products, consumer electronics devices, and handhelds. The company also provides system on chip products that integrate its core processing functionalities with other system components, such as graphics, audio, and video, onto a single chip. In addition, it offers chipset products that send data between the microprocessor and input, display, and storage devices, including keyboard, mouse, monitor, hard drive, and CD, DVD, or Blu-ray drives; motherboards designed for desktop, server, and workstation platforms, and that has connectors for attaching devices to the bus; and wired and wireless connectivity products consisting of network adapters and embedded wireless cards used to translate and transmit data across networks.
Further, the company provides NAND flash memory products primarily used in portable memory storage devices, digital camera memory cards, and solid-state drives; software products comprising operating systems, middleware, and tools used to develop, run, and manage various enterprise, consumer, embedded, and handheld devices; and software development tools that enable the creation of applications. Additionally, it develops computing platforms, which are integrated hardware and software computing technologies designed to offer an optimized solution. The company sells its products principally to original equipment manufacturers, original design manufacturers, PC components and other products users, and other manufacturers of industrial and communications equipment. It has a strategic alliance with Scientific Conservation Inc. Intel Corporation was founded in 1968 and is based in Santa Clara, California. (Yahoo Finance profile)
Factors to Consider
Barchart technical indicators:
- 80% Barchart technical buy signal
- Trend Spotter buy signal
- Above its 20, 50 and 100 day moving average
- It is presently only 1.11% from its 1 year high after having 9 up days and an increase of 10.10% in just the last month
- Relative Strength Index 66.52%
- Barchart computes a technical support level at 26.10
- Recently traded at 26.70 with a 50 day moving average of 24.77
Fundamental factors:
- 37 Wall Street brokerage firms have assigned 50 analysts to monitor this stock's numbers
- Analysts predict revenue will increase by 4.80% this year and another 7.40% next year
- Earnings estimates are for an increase of only .8% this year but up an additional 7.90% next year and continue for an annual increase of 11.61% for the next 5 years
- These consensus numbers result in 11 strong buy, 9 buy , 26 hold, no sell but 4 under perform reports sent to their clients
- The 10.96 P/E ratio is a discount to the market P/E of 15.10
- The 3.14% dividend rate which is less than 35% projected earnings is better than the market dividend rate of 2.20%
- The company enjoys an A++ financial strength rating
- If all the numbers are met analysts think an investor could see an annual total return in the 22% - 25% range over the next 5 years
General investor interest:
- 9,175 readers of Motley Fool have given opinions on this stock
- 94% of the general readership think the stock will beat the market
- 96% of the more experienced All Stars vote of the same result
- Fool notes that 93% of the market reports on the stock have been positive
- While Goldman Sachs is still negative, Jim Cramer, David Tepper and Jim Jubak are more positive
When I compare the company's competitors over the last 4 months - to include the market rally and the past earnings season - I find INTC up 16%, while Advanced Micro Devices (AMD) up 39% and Texas Instruments (TXN) up 8%:
Summary: The market has been fickle lately, so be careful. If you buy Intel at this point, please watch the 50 day moving average and the lower 14 day turtle chart as support, and pray for the invisible ceiling that seems to be around $27 to be broken soon.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AMD over the next 72 hours.
