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Picked Intel in CAPS



June 26, 2009 – Comments (3) | RELATED TICKERS: INTC

I just opened a pick in Intel. I would like the stock to get a bit cheaper before buying it with real money, but I think it's a good buy at today's price.

Intel is a tech titan. AMD has provided only limited competition. In addition, the massive capital requirements for investing in fabrication plants have left AMD trailing Intel severely. AMD had a technological edge for a while, but continued to use inferior manufacturing processes that eventually left their processors slower.

In addition, Intel is currently yielding over 3.4%. Intel has grown its dividends faster than the S&P average over the last 3 years. I think this is going to be one of the new dividend stocks to watch going forward, since the banks have had a huge setback. Intel is in great financial shape, and it can afford to boost payouts.

There are things to worry about, but they aren't severe. Intel is somewhat cyclical, like all semi stocks. However, I think we're at the bottom of the cycle and Intel has a wide moat protecting its profitability. The advent of Netbooks may end up with a lot of notebook purchases being replaced by netbooks. That will hurt the margins of just about everyone in the tech sector. However, I think the equipment manufacturers like HP and Dell are going to be the worst off. Intel does make the processors, and while their margins will get pressured, Intel will still be better off than HP/Dell. 

3 Comments – Post Your Own

#1) On June 26, 2009 at 3:21 PM, SkepticalOx (98.35) wrote:

Well, if everyone moves to netbooks, someone has to make all those processors going in the servers running the "cloud".

Then there's always processors in devices such as cellphones, and all the other smart tech that require more power.

I really like Intel, and it's probably a good long-term hold with those growing dividends. Question is though, is your money better spent elsewhere, including AMD? Is AMD so cheap that any potential rebound could see the stock tripling, quadrupling? Intel may be the better company, but is it the better investment or is it efficiently priced?

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#2) On June 27, 2009 at 11:53 PM, checklist34 (98.40) wrote:

I think INTC is a pretty good buy as well.  They have a decent yield, a great balance sheet, and what must be as close to an impassable moat as anybody around.  The stock has lagged the S&P fairly badly over the last 5 years, and it may bounce. 

I've never bought it because it doesn't fit my philosophy in todays environment of buying companies that are really, really beaten down in share price.  And in general I like to buy smaller cap stocks.

good luck!

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#3) On June 29, 2009 at 9:24 AM, weiwentg (97.82) wrote:

Sure, AMD might double ... or it might not. Buying AMD would be a bet that they can pull off major advances in processors and that their fab partners can increase maunfacturing technology to on par with Intel. That's a risky bet, imo. I'd rather take the safe bets. If you look down my posts a bit, you'll see an article that most of the hardest rallying stocks are low quality ones. The moaty companies are still the cheapest.

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