Intel Corporation (NASDAQ:INTC) is a $115.77 billion market cap company. Intel engages in the design, manufacture and sale of integrated circuits for computing and communications industries worldwide.
I like Intel as a long term hold. The yield has moved up to a level unexpected for a company of the size and market share that Intel commands. Today I shorted the September $19 strike price put options. I would be more than happy to own Intel at $18.50, which would be the price paid after factoring in the option premium. I have liked Intel for a while, and for more perspective take a look at my dividend increase article here.
The yield is currently at 4.3%, the PE Ratio is under 9 and even the "smart money," the shorts, are bailing out of their positions. Short interest dropped from the previous report by over 16%, and is now under 2%. There are ample earnings to maintain the dividend, as can be reviewed in the below graph.
Technically, Intel is far below the 200 day moving average of 21.49. This is most often a bearish sign to have the stock trading below the 200MA, but in the case of a company like Intel, I believe it is more to do with panic selling, along with fear of the markets, that is the catalyst for the weakness in price.
Intel has pricing power in the chip space as the market leader, a strong presence in Asia, and the de facto CPU standard. The book value is at least 8, of which about half is in the form of working capital.
The Intel brand name is one of the most recognized names in the world, and yet, it is currently priced for a serious drop in earnings. I believed this sets up a buying opportunity in which "heads I win, tails I break even." If earnings improve, or at least maintain current levels, Intel stock can be expected to increase in price. If earnings do come under pressure, it is already priced in and likely to have a minimal impact on share pricing. In the meantime, investors get to collect a dividend of over 4%. With the use of options, the risk may be lowered (along with potential gains), and option premiums can be earned.
It is hard to find companies of this caliber trading at bargain basement prices. I am not letting this one pass me by.
Disclosure: I am long INTC.