Intel (INTC) is an effective defensive asset for any investment portfolio. Intel has a dominant position in its industry along with an assertive plan and adequate capital to remain a leader in the tech sector. Right now is a favorable time to invest in this tech tycoon before the stock price begins to increase with the advent of new technology releases and innovations throughout the rest of 2012 and thereafter. Intel is positioned to capitalize on the recent growth and innovations in almost all of the primary tech sectors of present day.
The balance sheet and financials for Intel depict a healthy corporation primed for growth in the near future. The current stock price is around $26. The 52 week range has been from over $29 down to $19 while the 50 day and 200 day moving averages have been around $26 as well. The beta is slightly over one while the PEG ratio is close to one. The market cap is around $130 billion, exceeding the enterprise value by over $5 billion. The annual dividend rate is $.84 with a yield of over 3%. These numbers show that Intel is trending upwards slightly faster than the market and is somewhat overvalued on the market as well. At this price Intel is still a favorable investment, it has ventures underway and events on the horizon that could help the price rise significantly.
The price is around 11 times earnings while return on equity and net margin are almost double the industry average. The current ratio is above two and the quick ratio is slightly under two. Both the institutional ownership and gross margin exceed 60%. Both the operating margin and net margin have been decreasing slightly for the last three quarters finishing at 31% and 23%, respectively. For the last three quarters, return on equity has been around 27%. Sales are up .46% from last year and down 7% from last quarter. The current stock price has increased over 7% year-to-date. It is down over 5% from the past five weeks and down 4% over the past 12 weeks. This all indicates that Intel is a highly valued stock that is doing better than its competitors in the industry.
There are a few basic factors that make Intel a favorable investment. Intel has a well-established niche in a growth industry. It is by far the largest producer of computer chips worldwide and has several integral innovations in the technology industry. Intel is focused on creating innovative products from data servers to chips to Ultrabooks. Intel's opportunities will grow along with technology with the advent of Windows 8 and other innovations on the horizon. Intel is also set to invest into in an academic initiative and network structure to help foster technology and innovation into the future. There are a number of indicators, upcoming events and developments that bode well for Intel investors in the future.
Intel continues to come out with new products with wide appeal and influence in multiple industries. Intel is focused on improving its cloud computing and security services, data products and increasing market size in the evolving chip industry as well. Intel is addressing the data sector with the launch of its new Xeon Processer E5 Family. The E5 is made to support the increasing demands of new technology and the end-user. Intel projects the number of people on the internet will exceed 3 billion by the year 2015. Focusing on cloud computing, data servers and chip manufacturing will bode well as the mobile device industry continues strong growth for the next few years. Intel also recently announced a $100 million investment to foster innovation and IT work in the automotive industry. Intel also notes that IT and energy efficiency are both becoming more influential and important to more businesses around the world.
Over the last decade, sales have doubled from data servers and they currently account for 20% of Intel's revenue. Emerging markets like Brazil and China will help fuel stalling PC sales by single digits throughout 2012. The growth in the smart phone market is expected to increase Intel's mobile revenues by over 35% by the end of 2013. Intel's size, capital and goodwill along with its experience in the industry make it hard for the competitors to sustain in the industry. Intel has the ability to outlast anyone in the market and is poised to do so in the growing mobile chip industry. Qualcomm (QCOM) has already announced that it cannot sustain its current level of production and Intel is currently releasing an Atom line of chips specifically made for mobile phones to compete with ARM Holdings (ARMH).
Intel is taking an interest in the mobile market by producing new chips for mobile devices and by investing in the Ultrabook market. Intel will be investing in a number of manufacturers to help fund capital for production on touchscreen products for Ultrabook devices that contain the new processing platform, Ivy Bridge for mobile computational devices. Intel expects an increase in sales once Windows 8 releases with the new touchscreen Ultrabooks later in the year. Beyond its investments in data servers, chips and evolved pc hardware, Intel is also investing back into education, innovation and networking.
Intel announced a $40 million investment in building and revamping a network of education institutions and universities around the world with innovative, technology based initiatives and strategic agendas. The Intel Collaborative Research Institutes (ICRI) is being established to help foster innovation, invention and technology's prominent place in society. Ultimately, this will serve as a great resource for R&D, mergers and acquisitions and networking for Intel's interests. Intel currently controls 70% of the PC and laptop market but moving into the mobile and tablet sector opens an entirely new customer base. Google's Android software, powered by Intel, is currently on its way to be the most widely used system in the world. The economies of scale play heavily in Intel's favor, and it will continue to grow and prosper with the success of Google (GOOG) and possibly even Apple (AAPL) if it becomes the new, preferred mobile chip provider.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.