Intel: The Cheapest Tech Stock In The Market?

| About: Intel Corporation (INTC)

So what do we do with Intel (NASDAQ:INTC) and its $6 billion bond offering? The proposition is simple: You lend Intel a bunch of your money, and Intel will give you 2.7 percent per year over the next ten years.

And in ten years, you get all the money back, with the thanks of a grateful company that will wonder what ever possessed you to lend them that money so cheaply in the first place.

Maybe this sounds like I'm being harsh with this long term investment opportunity.

If you are going to go steady with Intel, shouldn't you go on a date first? Or at least look at what kind of stock it is?

That way we could decide whether to buy the bonds or the stock. Maybe we should by one or the other, both or neither.

Let's ask my relationship consultant, my own personal Dr. Phil about the stock:

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Data from Best Stocks Now app

Well established, conservative, with leadership qualities. What about its track record?

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Data from Best Stocks Now app

Deadly dull and boring.

  • Over the last ten years, Intel has returned just 2.7 percent a year. That includes the dividend -- which today stands at 4.5 percent.
  • Over the last five years, Intel has gone backwards by 3.1 percent per year. Now that is not "moving up in the world."
  • Over the last three years, Intel has been raging along at 2.3 percent total return per year -- six points behind the market.
  • And over the last year, Intel is down by 17.9 percent, while the market is up 12.2%. Seems like Intel is not aging that well.

I give Intel a D for performance and an F plus for momentum. Not a very good profile..

So it flunks performance test. Maybe value investors can find a heartbeat here:

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Data from Best Stocks Now app

The forward PE ratio is 10.2. The current PE ratio is 8! Intel is expecting to grow it earnings by 11 percent per year.

That's pretty optimistic for a company that depends on the desktop computers and missed the whole tablet, pad, smart phone craze.

Even so, I can hear the value investors licking their chops. Down boy!

So grudgingly, I give it an A+ for value. One out of two so far.

But before we make reservations for the engagement party, we need to give this suitor a visual inspection. Let's look at the chart.

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It is in a horrible downtrend. And that is all I need to know because I do not buy stocks in a downtrend.

But let's get to the bond. Our suitor wants another chance and says he will be good for the next ten years, paying 2.7 percent. Better than Treasuries, he assures us.

We are in the trough of historically low interest rates. So I can understand why Intel wants to be a borrower. That is smart.

But I do not understand why anyone would want to be a lender. Not right now. If interest rates rise -- and what other direction can they go over the next ten years? --the value of your bonds is going to wilt like yesterday's wedding flowers.

I'm not saying Intel is a bad company-far from it. I'm happy their chips are running the computer I am using to write this article.

But buying an ownership interest? Or lending them money? I don't think so. Not when they are so many other suitors out there who live in better neighborhoods, drive nicer cars, wear better clothes, and have much better prospects.

Out of 3212 stocks, Intel comes in at it at 2616.


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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.