Intel (INTC) — The world’s largest chip company is expected to benefit from market share gains in PCs, cloud computing, communications, storage, tablets and smartphones, according to analysts at S&P Capital IQ. They estimate earnings of $2.20 per share in 2014 and $2.28 in 2015, and have a 12-month target of $37 on the shares.
On Oct. 15, Intel posted better-than-expected third-quarter earnings and revenue. Sales increased 8% year over year to $14.55 billion versus an expected $14.38 billion. Earnings jumped 14% to $0.66 a share, beating estimates by a penny.
The stock broke down from a broad top when it sliced through its 50-day moving average at $34 in September. But this well-known chipmaker, which is diversifying away from PCs, is selling at just 14 times Capital IQ’s 2014 earnings estimate with lots of room for P/E expansion.
Buy INTC between its 200-day moving average at $29 and its June breakout at $28. The last of two gaps, formed in the June and July breakouts, will be filled at $28.50, and the coast should be clear for a trade to $33.50.
Investors seeking quality stocks should buy INTC with a long-term objective of $37. It is one of the few technology stocks with a dividend of almost 3%, and the company is likely to continue to raise its payout. Longer-term investors could see a total annual return of almost 30%.
