Is Intel Destined to Remain Only a Dividend Play?

Jan.15.11 | About: Intel Corporation (INTC)

I have been on the Intel (NASDAQ:INTC) bandwagon for quite some time now. I felt that the stock had the potential to make money for patient investors. Intel’s management is doing a great job of guiding the company. Intel was one of the few technology companies that emerged from the recession even stronger than before.

So, is now the time to buy Intel?

Intel’s Latest Earnings

The earnings keep going higher and higher but the stock does not move much. It’s not the fault of Intel’s board. Look at some of the highlights from the recent earnings release.

Revenue was outstanding, rising 8 percent to $11.5 billion and 59 cents per share. The gross margins were an incredible 67.5%. Next year looks even better with revenue estimates over 11.5 billion dollars next quarter.

The CEO even stated that, “2010 was the best year in Intel’s history. We believe that 2011 will be even better.”

There is also Intel’s pending acquisition of McAfee Inc (MFE).

So, what did the stock do amidst such news? Shares were down almost 1% Friday.

Intel’s shares appear range bound. The stock can never seem to take out the $26 level. The company had a phenomenal earnings report with net income up 48% and the shares were actually down Friday. You might expect that if the stock had a big run up before the earnings report but that isn’t the case.

Intel’s stock was only at $21. I am beginning to waver in my view of Intel as a stock with growth potential. It’s still a great company with a fantastic balance sheet but Intel is becoming a pure dividend play. Shares of Intel still look like a value play to me but the stock has been cheap for quite some time now. With a 3% dividend yield and shares trading at just 10 times earnings, I would be willing to buy shares of Intel.

Why do you think that shares of Intel are range bound? Do you think that the stock will ever break out?

Disclosure: I do not have a position in Intel.