Friday, July 22, 2011

Intel - Still Bullish

In a post at the beginning of June,  readers will recall CCI had the view that Intel would be a good buy at $22 while "our friends" at GS had just lowered their price target to $20.
Battle of the Titans

Well surprise, surprise today we find Intel closing the day at $23.13 after reporting another great quarter earlier this week. Looks like CCI wins another round!

OK...that's enough patting myself on the back......for now.....LOL

Intel - looking ahead
Time to focus on the look ahead for Intel. While just about ever aspect of Intel's earnings were positive the bad news was they lowered their forecast for PC industry growth to 8%.  Of course the fact that their cloud business was up 50% did not get that much press.  As discussed here in January, I think Intel's role as the preferred supplier for the backbone of the cloud is very under appreciated by the street.   Trying to put some of this noise in the background, it seems like Intel's earnings expectations are headed toward $2.50 in 2012.   Feel free to play pin the multiple on the earnings yourself, but to help the math challenged reader a multiple of 10 is $25 (up 8%), 12 is $30 (up 29%), etc, etc.  That does not mention a book value of $9 per share, and a 3+% dividend.  Oh there is also the little tidbit about their huge R&D efforts yielding a recent announced breakthrough in 3d, 22 nano chip design.  I'm not a chip expert, but if this design does consume half the power as stated, it could be a game changer for the longer term.

So, yes I'm still bullish on Intel. 

CCI already have a large position.  I'm fighting the temptation to buy more just because I don't want to fall too much in love with the story. However, I will try to get out of (or roll up and out) the one lot of Aug $22 covered calls in the portfolio on any pull back in the stock price.

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