Company name: Intel
Target Price: $62.50
Projected Yield: 27.50%
Time Line: 3 to 6 months
Intel is a US corporation that manufactures a wide range of computer devices and components. The product line includes microprocessors, system logic sets (chipsets), as well as semiconductor components for industrial and networking equipment.
What's the Idea?
Capitalized on undervalued stocks that plunged on a negative piece of news about the next gen microprocessor release being postponed.
Buy Intel Shares >>
Why Trade Intel?
Reason 1: Massive Fall in Stock Price amid News
In July, Intel management announced that the mass production date for 7nm processors would be rolled over to late 2022. Upon that announcement, the company stock fell by over 20%, as the markets perceived this situation as favorable for Intel's main competition, AMD.
Currently, Intel is trading well below its peers, which means the market reaction is too strong. The company's PE is 10.39x, while the EV/EBITDA is at 8.56x, way lower than the competition's average, i.e. 98.94х and 30.78x, respectively.
Reason 2: Financial Stability
In the first six months of 2020, the company's earnings increased by 21% compared to the same months in 2019. The company develops its business in the field of electronic devices and computer components, with the sales rising across the board.
The personal system solution segment showed an increase in earnings of only 10% since early this year, and amounted to $19.20 billion. Meanwhile, the data center division sales amounted to $14.10 billion, up by 43% compared to the first six month of 2019. Memory and software division sales also grew by 61% and 5%, respectively, with a total of $4+ billion in revenue. The net profit rose by 32% compared to the same period last year.
Intel also raised its operating profit margin from 27% to 32% by lowering operating costs. The company maintains a stable free cash flow of $7.75 billion in Q2 2020 against $4.03 billion in Q2 2019. The debt load remains low, while net debt / EBITDA is at 0.32, and total debt / EV is 0.31.
Intel keeps on delivering strong financial results, which may lead to a recovery to the previous price by the end of this year.
Reason 3: Promising Developments
Despite the release of new processors being postponed, the corporation announced the development of a new method for manufacturing semiconductor transistors. This method can improve the performance of the next generation processors by 20%. In case of successful implementation, the company will quickly restore its competitive advantage in the market, and will not only maintain, but also speed up the sales growth in the microprocessor segment.
How to Use the Investment Idea
- Buy Intel shares at the current price.
- Allocate no more than 3% to 4% of your midterm transaction budget.
- Sell the stock when the price is at $62.50 per share.
How to Buy Intel Shares?
If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.
After opening an account, you can buy shares in either of the following ways:
Freedom24 Online Store: This is the easiest way to do it. Add the number of shares you want to buy to the cart and pay by credit card. Once the transaction is processed, the purchased shares will appear on your investment account.
Freedom24 Web Platform: Go to the Web Terminal section, type INTC.US (Intel ticker in the NASDAQ) in the search box, and select Intel Corp. in the search results. Open a secure session in the trading window on the right, select the number of shares you want to buy, and click Buy.
Freedom24 iPhone App: Go to the Price screen and tab the search icon in the top right corner. In the search box that shows up, type INTC.US (Intel ticker in the NASDAQ), and select Intel Corp in the results. You will then see Intel stock in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of shares you want to buy and click Buy.
Buy Intel Stock: Don't Miss a Potential Rise after a Sharp Drop!
Buy Intel Shares >>
*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.