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Real Time Insight

Like many tech stocks to start 2013, Intel (INTC - Analyst Report) has been rangebound. The computer chip giant is pretty much flat on the year, representing a slight underperformance when compared to the broad tech (XLK - ETF report) sector.

This continues the sluggish trend for INTC, as the company has struggled over the past year, losing about 25% of its value in the time frame. This is especially bad considering that XLK is more or less flat in the same period, meaning that INTC has been a chronic underperformer.

Obviously, this hasn’t always been the case for INTC, as the firm was crushing the tech competition for a big chunk of 2011 and 2012, before it swooned last April and never looked back. Clearly, perceptions have changed on INTC lately and some believe that there aren’t many catalysts to rekindle the company’s prospects going forward.

Still, INTC remains a vital part of a number of computing devices, while its weak stock price has sent the yield up to an impressive level. The company is actually paying out over 4% at time of writing, so it could be considered a yield destination by some, and especially those who are looking for income options in the technology arena.

But what’s next for INTC? Can the company see a rebound in its share price, or is it doomed to the realm of slow growth higher yield firms in the tech world?

And most importantly, are you a buyer or seller of INTC at this point in time?

Reasons to Buy:

  • Combine the Forward PE (below 11) and a yield above 4% and you have a great value in the technology world.
  • Earnings estimates have been moving slightly higher for the current quarter, suggesting analysts are growing more bullish on the firm’s prospects.
  • INTC also has a history of positive surprises; the firm has beaten expectations for the last four quarters.

 Reasons to Sell:

  • Year-over-year growth is quite poor for INTC, with current quarter and current year estimates coming in at negative double digits.
  • While the stock might be in a highly Ranked Zacks Industry, it is just a 3 and there are plenty of other options in the space that have better Zacks Ranks.
  • INTC has long been the king of PC chips, but can they pick up the pace (and market share) in the increasingly important smartphone market despite being the (relative) newcomer to the space?

Which story wins out for you; the value of this high yielder, or worries over its future?

Let us know in the comments below!

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