Intel Corporation (INTC) is a former hot stock of the tech boom era that has recently become a slow-mover. The company delivered record earnings last quarter, but the announcement was not greeted with enthusiasm by investors. However, with its current technical pattern and cheap valuation, I believe Intel Corp (INTC) can see significant upside this year to catch up with the rest of the semi-conudctors group.
The Intel trade has a similar rationale as the Microsoft trade we mentioned a few weeks ago in that it is attractive on several different levels. First, Intel Corp seems to be significantly undervalued, carrying a forward P/E of less than 10 and a PEG ratio of only 0.86. It has a very sound balance sheet with a current ratio of ~3.5 and sits on a boatload of cash. Intel even raised its dividend by 15% at the end of last year to 72 cents per share annually (~3.3%), making it an attractive play for income-oriented investors.
Technically, Intel looks poised for a large measured move. If you look at the daily or weekly chart, you can see the stock has put in a head and shoulders pattern over the past year with a neckline at $22-22.50. The measured move would see Intel run to around $26.
*DISCLOSURE: Long INTC
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