Shares of the semiconductor giant, Intel Corp., have been leading the markets higher ever since they bottomed in late 2012. How long can this behemoth continue at this trajectory?
The Bulls' View Of Intel...
The bullish view of Intel Corp. (NASDAQ: INTC) is that the company is fundamentally and technically strong, and that it is plugged into the macro trend of mobile computing/commerce.
The bulls point to Intel's cheap valuation metrics: a price-to-sales of 3.17 and a price-to-book of 2.89. They also point to Intel's seemingly flawless balance sheet and enormous cash flow as reasons to feel comfortable with their long positions.
Technically, Intel is clearly in a very strong uptrend and should, over time, move higher. The question is whether the stock needs to pull back and/or consolidate prior to much more upside taking place.
The Bearish View Of Intel...
The bears in the Intel arena have only an overbought condition on the price chart and the PEG ratio of 2.0 on which they can hang their hats. Outside of that, Intel's balance sheet, huge cash flow and the growth opportunities presented by the growth in mobile computing all line up against the bears.
What Do The Technicians Say?
Technical analysts note that Intel shares likely have room to run up to the 161.8 percent Fibonacci projection line (for wave “iii” on the chart) at $36.93 (from $34.57 at Wednesday's close).
They would have the existing longs staying long for the rest of the ride higher. However, for aspiring longs they would rather see purchases made following a pullback in the stock, perhaps down to the green line on the chart at $28.98.
Intel would seemingly only pull back like that in conjunction with a broader market pullback, though. The technicians note that aspiring –- and adventurous -– shorts can take their shots at Intel only as the stock tests the projected resistance at $36.93 (with stops in place on any close above $37).
Intel appears to be a great “buy the dip” candidate and not so much one on which to place bearish bets. The challenge here is to remain patient for more desirable entry points on the long side.
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