Guest Analyst: Tim Biggam, TradingBlock (August 9, 2011, 1:10pm CDT)
|Symbol||Analyst Target Price||Target Date|
|INTC||$22.50||Dec. 16, 2011|
Following the recent rout in equity prices, we’re searching through the rubble for low-beta, low P/E and higher-yielding stocks that still display a fair amount of growth. One of the first names on our list was Intel (ticker: INTC).
Intel recently reported second-quarter earnings of $0.54 versus estimates of $0.51. Revenue came in at $13.1 billion, a 21% year-over-year increase. Due to the recent sell-off, Intel now yields 4.2%, with INTC being down nearly 13% over the last three months. Compare that to the 10-year yield of 2.4%, and INTC certainly looks attractive in comparison to bonds.
With a P/E below 10 and a forward P/E of 8.7, Intel also looks relatively cheap from a fundamental perspective. It trades at only 2.5 times revenues while showing earnings growth of over 7% over the past 5 years.
With a low payout ratio and an annualized rate of 14.5% dividend growth over the past year, we look for INTC to grind higher over the next few months, with a year-end price target of 22.50.
Play of the Day
Based on Intel's (ticker: INTC) current market price of $20.15 and using a target price of $22.50, a target date of December 16, 2011 and $1,000 of investment capital, below are three options strategies (ranked by potential profit) and a comparative stock trade to consider should the price target be achieved at the target date.
Click on the strategy name below to access trade details using TradeBuilder on TradingBlock.com. Powered by TradingBlock's TradeBuilder.
|Strategy (click for details)||% Return at Target||Probability of breaking
even or better
|Buy Jan Call Spread||+70%||55%|
|Buy Jan Call||+46%||50%|
|Sell Jan Put Spread||+44%||60%|
* Subject to change due to changing market conditions.
DISCLAIMER: This content is provided for educational and informational purposes only. Evaluate any strategy prior to use to understand risk and suitability. TradingBlock does not endorse or warrant any Market Analyst content, service or product. Use this content at your own risk without guarantee or warranty of any kind from TradingBlock. Tim Biggam is a TradingBlock registered representative. He is not compensated by TradingBlock for any market research or analysis services.