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If you are using a PC to read this blog entry, chances are fairly high that your computer is powered by an Intel Corp. (INTC) processor. By far the largest chip manufacturer in the industry, Intel has long generated a lot of cash. Its revenue growth has averaged more than 30% for the past ten years and profits have been strong too.

Both revenue and profits were down in 2006, however, as Intel has been facing stiff competition from Advanced Micro Devices, Inc. (AMD). Moreover, PC sales growth has dropped significantly since the 1990s. The stock is down from its highs of $70 (2001) and $35 (2004), and is now trading in the low $20s.

But I think this is going to be a good year for Intel, and it is a good time to buy.

With the launch of Microsoft Vista, demand for its product is likely to grow. The company continues to spend more on R&D than anyone else in the industry and will continue to offer new products to help in its ongoing battle with AMD. Intel had a number of job cuts this year, which will boost profitability again.

The company announced its fourth-quarter results last night. Intel's 2006 fourth quarter disappointed Wall Street with revenue at $9.7 billion versus $10.2 billion in the same quarter last year. Investors were watching closely, especially since AMD announced an "off" quarter, which sent its stock price down 9.5% last Friday. The Wall Street Journal reported that expectations were higher for Intel, which meant the stock was expected to jump if the results had been good. Unfortunately for those who bought on great expectations, there are some investors who saw red on Friday. Intel's stock on Wednesday ultimately closed down more than 5%.

In fact, overall the results looked pretty bad. The press release shows a series of negative percentages in comparing the quarterly and yearly results to last year. Most notably, net income for 2006 was $5 billion versus $8.7 billion for 2005.

Regardless of these short-term results, I think Intel is on the lower end of its long-term range, and there is room for some nice growth over the coming year. Remember, you really want to buy when a stock is out of favor but positioned for a string of successful initiatives, milestones and technological advancements.

Type of stock: One of the biggest and most successful high-tech companies.

Price target: I think this is a good bet at $21. This will be the year that technology makes a comeback - I see Cisco Systems Inc. (CSCO) as one of the really big winners for the year, for example - and investors have the chance to buy Intel's stock at a price lower than most of the fast money expected to see.

INTC 1-yr chart
INTC 1-yr chart

Source: Intel Corp.: Time to Buy