Itzik12's  Instablog

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Hi, 7% for a year, that's a goal. and it's not easy goal. Form my perspective, only when you trying return solid you succeeded to do more. I'm working per value investments terms. I'm doing only several moves a year. I believe in history of the market and about economy is doing well at the long... More
  • Reasons To Consider Intel (INTC) Company 0 comments
    Sep 12, 2013 4:30 AM | about stocks: INTC

    In this article I'll describe to you why i believe it's possible to take an action with Intel stock at this level of the stock markets.

    But first, let's review the 2 lasts articles on WDC and FCX according to Ben Graham intelligent investor book buys;

    Both of them were successful. So you can go and read them to understand my way of working. (and it's not a lot).

    At this point it's important to zoom out on the market. what do we have yet?

    1. SP 500 calculated PE ratio is 18.

    2. SP 500 calculated Dividend yield is 2.08%.

    3. US Treasury 10 years yield 2.88%.

    The ultimate conclusion is that the earning yield for the SP500 is 5%. (we put the dividend yield on a side for a moment) and the earning yield for 10 years treasury bond is 2.08%.

    By the way, 30 years bonds yield is 3.8%.

    So weather you like to trade when which on is higher than the other one,the result is clear: current prices in the stock market are high. No meaning it's not possible for them to go higher, but just bare it in your mind.

    So how to proceed from this point? as always, looking for profitable company, rational PE ratio, good ROE, Reasonable Price to book, small debt, and my preferable- one on the major indexes company.

    Even tough i believe that only 50% or less should be in stocks at the moment, the companies at who covered this 50% should be priced in relatively price. Stocks that suffered by the fear of the market, or stocks that not stable with other own net income profit (but still have profit for a years)

    Zoom in definition on Intel:

    PE ratio: 12.

    PB ratio: 2.

    ROE: 18%.

    Now lets assume that someone offer you deal to purchase his piece of his own company. that pays you 4% in dividend, and produce return of 18% on it's own company equity. But there's a trick- you need to pay double then the book value of the company.

    Compare it with banks results, with 9-10% ROE, the P/B should be 1. in our case it makes sense of P/B of 2.

    Intel isn't cheap stock. but it's not expensive. We saw them perform huge income in tough years. The one of the most expensive R&D departments. The company also have a tough competitors.

    I would sell it in case one of those cases:

    1. PB to be 2.5

    2. If price dropped bellow 22.

    3. 1 day increase at the stock price.

    INTC Price / Book Value Chart

    INTC Price / Book Value data by YChart

    Disclosure: I am long INTC.

    Stocks: INTC
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