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Intel Corporation Message Board

  • banmate7 banmate7 May 21, 2013 9:40 PM Flag

    Should I Invest More in this Excellent Company?

    I own 253 shares at an average cost $19.44/share, reinvesting dividends. I've realized a nice 25%gain since buying a little over a year ago. It met most of my value criteria: cheap PE, good cash flow & balance sheets, solid business fundamentals, and excellent dividend.

    I am thinking of putting more money in, maybe $10k. I still feel Intel will be an iconic & critical part of evolving technology for years to come. I am fairly confident their deep pockets & world class R&D will see them dominate even mobile computing. It's still cheap at a PE of 12.

    I guess I answered my own rhetorical question in some ways. But I'd appreciate any thoughts, advice, critique, or forecasts. In particular, is a potential pullback realistic? Or is this a cheap enough entry point?

    As might be obvious, I am mostly a value investor. I buy great companies at PEs lower than, for example, a 10 year average. I reinvest dividends. I try to hold forever. I put the bulk of my money in companies like KO, GLW, CNI, DOW, NOV, CAT, and JNJ. I consider INTC to be in this blue chip category.

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    • Intel's PE is misleading because in the last 2 quarters, and this quarter, they took a one time excess capacity charges and startup cost to upgrade to 14nm. If you take that into account, Intel's PE is actually ridiculous lower than 12 around 10. Beginning in Q3, we won't be seeing those charges/costs and Intel's earnings will really shine. Q3 and Q4 will be even better than Q4 2011, when their revenue was $13.9 billion and earnings of $0.64/share. So for Q3 and Q4 we are talking about earnings of $0.70 or more. This is Microsoft's numbers folks! Then in 2014, with 14nm in full steam and new refresh of products like Broadwell, which is when, for the first time, Intel's Core CPU can go into tablets FANLESS. Think about that! And with 14nm, we also get refresh of Atoms and other products for smartphones and servers. Make no mistake about it, Intel's future is bright and current stock price is grossly undervalued.

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