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TheDumbMoney (48.81)

Adding Intel Shares

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August 22, 2012 – Comments (4) | RELATED TICKERS: INTC , AAPL , MSFT

As noted in my pitch log, I added 28 more shares of Intel in my IRA.  The stock is still down over 10% from its high for the year, holds a bunch of cash, sports a 3.3%-ish dividend yield, and sports a sub-11 P/E and sub-10 forward P/E, reasonable PEG ratio, is making gobs of free cash flow, and is striving to meet challenges relating to the mobile revolution.  It's not a home run, but this is a no-brainer hold for me for the next decade or until there is some mathematical proof-positive that it is actually in decline, rather than speculation. 

For the record, my blogs and Fool comments reflect that I called the RIMM implosion in 6/2011, I called Best Buy well in advance of the implosion.  I just don't see it yet on MSFT or INTC.  The key for both stocks, though MSFT more, will be the actual market reaction to Windows 8 at the end of 2012/early 2013.  Even if Windows 8 tanks, the stocks will not go to $10 overnight -- just as RIMM and Best Buy experienced relatively protracted declines.  There will be time to get out.  The time to make the evaluation of these stocks' futures is then, not now.  Right now, they are cheap, and the potential catalyst to begin their slide, or to make them pop, has not yet happened.

I have held stock in INTC since around $13/share during the crisis, and have added a few times, the last time at about $20/share not quite 1&1/2 years ago.

As I have stated many times, this CAPS player does not attempt to win at CAPS, at least not quickly.  All stocks listed here are my real life holdings, and they are my ONLY real life stock holdings outside of mutual funds.  When I sell out completely I remove the stock from CAPS.  When I add shares I reflag the timeframe so it goes the date of my last purchase is always visible.  Notes about purchases are in my pitches.

Also, I have a new CAPS player, "TheDumbMoney2," which does attempt to win at CAPS, started at the end of April 2012.

Happy summer!  I don't know about you, but I can wait for the "let's play chicken before we compromise" Euro crisis to hit again this fall, now that Eurozone leaders are returning from their  summer vacations.

Oh, and I'd love it if you would follow me on Twitter, at https://twitter.com/The_Dumb_Money

4 Comments – Post Your Own

#1) On August 22, 2012 at 1:23 PM, Mega (99.98) wrote:

Speaking of Intel, they were on 60 Minutes last night (originally from 2008).  Nicholas Negroponte was accusing them of sabotaging his nonprofit One Laptop Per Child. Pretty harsh.

http://money.cnn.com/2008/01/04/technology/kirkpatrick_negroponte.fortune/

Intel is my third-largest position. Intel's long term potential reminds me of Buffett buying Coca Cola in 1988 (although the nature of the moat is completely different). Who else can provide processing power on Intel's scale?

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#2) On August 22, 2012 at 1:43 PM, TheDumbMoney (48.81) wrote:

"...but I can wait..."

meant to say,  "...but I can't wait...."

That's bemused expectation, folks, a close cousin to irony, but more of a product of a generally sarcastic worldview.

Mega, meh, yeah seems like a non-event for the stock.  Both Intel and Coke have wide moats, I agree.  I think Intel's is totally discounted, while Coke's, while one of the strongest in the world, is exaggerated.  For Coke, the potential invaders of the castle are health concerns, changing tastes, and most importantly regulation.  For Intel it's the technological innovation of competitors.  I would be flat out surprised if Intel stock does not at least double in the next ten years, though as stated above the true Windows 8 introduction will be a time to reassess my thesis, and with a decision made no later than about March or April of next year.

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#3) On August 23, 2012 at 3:55 PM, EnigmaDude (87.24) wrote:

I dunno.  I had some Intel shares in my IRA but I sold them for around $26.  If you look at the chart for the last 10 years or so, it seems that every time the share price gets up around $27 or so it plummets back down below $20.  So maybe the way to play it is to wait for the drop then add some shares.  Perhaps the next 10 years will be better...

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#4) On August 24, 2012 at 3:32 PM, TheDumbMoney (48.81) wrote:

Hi Enigma, I'm more focused on the fundamentals.  I see a stock at or near all-time highs for profits, with P/E and PEG and P/B ratios that have consistently moved lower over the past 12 years.  INTC like many stocks has traded in a channel for the last ten-to-fourteen yars.  WMT is another great example.  A lot of it has to do with the work-off of the dot-com-era bubble, some with declining expectations.

DM 

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