With shares of Intel (NASDAQ:INTC) trading around $23, is INTC an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Intel designs, manufactures, and sells integrated digital technology platforms worldwide. The company operates through PC Client Group, Data Center Group, Other Intel Architecture, Software and Services, and All Other segments. It offers microprocessors, chipset, system-on-chip products, wired network connectivity products, and wireless connectivity products. The company also provides mobile phone components comprising of baseband processors, radio frequency transceivers, and power management integrated circuits and mobile phone platforms, such as Bluetooth wireless technology. In addition, it offers endpoint security, network and content security, risk and compliance, and consumer and mobile security software products for consumer, mobile, and corporate environments to protect systems from malicious virus attacks, as well as loss of data. Processors are essential pieces of hardware for just about any technology or machinery that operates in virtually every industry. So long as technology keeps improving, and it will, Intel will continue to provide innovative products to developed and developing countries and economies, worldwide. The variety of products offered by Intel make it a major player in the technology industry that will surely see increased profits well into the future.
T = Technicals on the Stock Chart are Strong
Intel stock has been a part of a price range extend back to early 2001. The stock is at the middle of this range and is looking at heading towards the top end, if not higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Intel is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Intel options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Intel Options | 22% | 13% | 14% |
What does this mean? This means that investors or traders are buying a very small amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| May Options | Flat | Average |
| June Options | Flat | Average |
As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very small amount of call and put option contracts and are leaning neutral to bullish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion…
E = Earnings Are Decreasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Intel’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Intel look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | -24.53% | -24.40% | -10.77% | 0% |
| Revenue Growth (Y-O-Y) | -2.56% | -2.95% | -5.41% | 3.61% |
| Earnings Reaction | 0.04% | -6.3% | -2.5% | 3.27% |
Intel has seen mostly decreasing earnings and revenue figures over the last four quarters. From these figures, the markets have had mixed feelings about Intel’s recent earnings announcements.
P = Excellent Relative Performance Versus Peers and Sector
How has Intel stock done relative to its peers, Advanced Micro Devices (NYSE:AMD), Texas Instruments (NASDAQ:TXN), Nvidia (NASDAQ:NVDA), and sector?
| Intel | AMD | Texas Instruments | Nvidia | Sector | |
| Year-to-Date Return | 14.67% | 12.71% | 17.14% | 9.79% | 13.70% |
Intel has been a relative performance leader, year-to-date.
Conclusion
Intel provides technology products that serve a variety of functions to a wide range of companies operating in diverse industry. The stock has been in a trading range for most of the last decade and looks to be headed towards the top end, if not higher. Earnings and revenue numbers have sent mixed signals to investors who have not been convinced about Intel’s earnings reports. Relative to its peers and sector, Intel has been one of the year-to-date performance leaders. Look for Intel to continue to OUTPERFORM.
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