Introduction
I have 170 shares of intel stocks. I like to take some time to learn how Intel works as a business. I like to be a patient investor, do not worry about market value with 5% loss right now.
My study
Here is the article called "Plagued by Chip Delays, Intel Stock Is Almost Cheap Enough to Buy".
My study notes are the following:
- below 50 line, price-to-earning of 10 times
- Intel has a fair value of $66. It scores a 94/100 on value (based on several metrics, including price-to-earnings and EV/EBITDA).
- Intel: plenty of cash on hand and a big marketing budget
- AMD: the favored vendor for the do-it-yourself crowd and relies on word of mouth for sales
- AMD: growth will require more marketing budget
- To trade to the $66 – $76 level, Intel will need a few quarters to win back investor trust. It can no longer miss delivering on product milestones. A cyclical downtrend must end, soon.
- I purchased 170 shares at price $51.00 dollars, so I may be able to profit 50% return in a few quarters, in other words, less than one year. $4000 US dollars as a beginner. Good job.
Ever since semiconductor chip giant Intel (NASDAQ:INTC) announced yet another delay on its next-generation computer processors, shares traded below the $50 line. Intel stock is still a great value buy, paying a dividend that yields almost 3% and at a price-to-earnings of 10 times, but astute investors are justified in shunning the stock despite favorable valuations.
As long as Advanced Micro Devices (NASDAQ:AMD) takes Intel’s desktop and server market share through Ryzen and EPYC, respectively, Intel looks unattractive. But Intel’s Tiger Lake preview at Architecture Day 2020 gives shareholders hope.
Intel’s Ice Lake chips are 10nm, behind AMD’s 7nm Ryzen 4000 chips. And 7nm CPUs are not ready until 2022 at the earliest. This gives AMD over two years in lead time. How might Intel catch up?
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Tiger Lake is Intel’s 11th-generation processor. It uses a new SuperFin transistor, a 10nm solution. Intel claims that a new SuperMIM (metal-insulator-metal) capacitor will give a five-fold increase in capacitance. In real-world terms, it will cut voltage and increase transistor and product performance.
The market’s lack of higher buying in Intel stock in the last week suggests that investors do not care about the development. The stop-gap solutions will not stop AMD from taking its market share.
Still, Intel is the favored chip supplier at retail stores. Lenovo (OTCMKTS:LNVGY), Dell (NYSE:DELL), and HP (NYSE:HPQ) usually feature an Intel-powered laptop or desktop at its online stores.
A Closer Look at INTC Stock
Intel still has plenty of cash on hand and a big marketing budget. Conversely, AMD is the favored vendor for the do-it-yourself crowd and relies on word of mouth for sales. But as AMD’s cash flow grows, its advertising budget will increase. Eventually, AMD advertisements will drive chip sales at a higher pace.
Intel stock has a positive catalyst in the 10-nanometer product is only delayed but not canceled. As it ramps up the product refresh in late 2022 and 2203, it needs to minimize market share loss. It may lower its production costs and tweak its average selling price to remain competitive.
The 14-nanometer product still offers customers decent power draw relative to the CPU’s performance. Attractive prices will deter customers from buying AMD. This will hurt Intel’s profitability in the near-term. Still, by slowing the market share loss, it will buy time. The product schedule slippage is double the previous delay forecast, at four quarters.
Fair Value and Intel Stock
Intel has a fair value of $66. It scores a 94/100 on value (based on several metrics, including price-to-earnings and EV/EBITDA).
Source: Chart Courtesy of StockRover.com
Intel stock has a quality score of 99/100, based on metrics like net margin and return on invested capital (according to Stock Rover). Based on its future cash flow discounted to present value, SimplyWall.St thinks that Intel is worth $76.00.
In the seasonality chart below, Intel is about to enter a period of upside starting in Sept.
To trade to the $66 – $76 level, Intel will need a few quarters to win back investor trust. It can no longer miss delivering on product milestones. A cyclical downtrend must end, soon.
Actionable Items
I have to push myself to learn to think long term. One year is reasonable time horizon. I do think that it takes time for me to learn as an investor.
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