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Intel: Time to Buy

|Includes: Intel Corporation (INTC)

Intel (INTC) is the Rodney Dangerfield of the stock market: it gets no respect whatsoever. Here we have a world-class company with impeccable financials and the dominant player in a global market, yet investors treat it like it is nothing. I don’t think this will last forever and believe that long-term investors can reap solid gains by buying it now.

Even after Intel warned that its sales would be lower than expected on Friday, the stock still rallied over 1%. This is a great indication that investors have said enough is enough and that too much negativity has been priced into the stock. If bad news won’t make the stock drop further, what will?

Certainly the weak economy and the fact that semiconductors are levered to economic growth is contributing to the stock’s terrible performance, but I feel that it is overdone. The valuation alone warrants picking up some shares because there is too much bad news priced into the stock. Intel is currently changing hands at only 9x this year’s earnings estimates of $2.04 per share. I remember when this was the quintessential growth stock trading at lofty valuations. It even pays a strong dividend of 3.3% annually.

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Disclosure: No positions