We are having a nice little sell-off on another tepid jobs report. The tech sector has been hit hard today on concerns around slowing growth accentuated by a major earnings and revenue miss and dismal guidance from Informatica (INFA). Berenberg also cut VMware (VMW) and Cognizant (CTSH) to holds due to the worries about IT spending reinforced by Informatica's report. I took advantage of the selling today by selling some January 25 puts on Intel (INTC) as the stock has solid value here as well as some decent technical support.
According to the business description from Yahoo Finance, "Intel designs, manufactures, and sells integrated digital technology platforms primarily in the Asia-Pacific, the Americas, Europe, and Japan."
Here are 6 reasons why INTC is a solid play at just $26 a share:
- The company has an A+ rated balance sheet with no net debt, yields 3.1%, and has raised its dividend payout at approximately 14% a year over the past half decade.
- INTC has a five-year projected PEG of under 1 (0.88), and revenues should increase better than 5% this year before accelerating to more than 7% next year on new products like Intel's atom chip for the mobile market.
- The company has nicely beat earnings estimates for the past six quarters, and consensus earnings estimates for both FY 2012 and FY 2013 have ticked up over the past three months.
- The stock is cheap at under 7 times operating cash flow and less than 10 times forward earnings, a discount to its five-year average (15.2).
- Credit Suisse has an outperform rating and a $35 price target on Intel and believes the company should print $2.90 a share in earnings for FY 2013.
- The stock looks like it has near-term technical support at around current price levels (see chart below).
Disclosure: I am long INTC.