Intel Corporation (INTC) may not be tearing up the track, but it is a quality tech company that is so deeply embedded in the technologies of today and tomorrow, it would take a massive force to dislodge it.
The market cap of INTC stock is nearly two times larger than its closest competitor, Qualcomm, Inc. (QCOM).
It has 99% of the server business.
It remains a pioneer in sectors like Internet of things (IoT), 5G telecom and WiGig (the newest iteration of Wi-Fi).
And to top it off, at current prices, INTC stock is throwing off a 3.5% dividend yield.
Intel shares are off about 13% from December, which is what makes it a great buy here. Many analysts are not thrilled with the fact that nearly 70% of INTC’s revenues come from its desktop production — they would prefer more mobile, IoT and mobility exposure for the company.
But Intel is moving there. It’s just that it’s a $142 billion company, so you can’t exactly turn it on a dime. Nor would you want to. You see, while desktops for businesses and individuals are fading away, data centers for cloud computing and big data processing are on the rise. And these are very high-end machines with solid margins.
Also, keep in mind that less than four years ago, INTC had little exposure in the mobile telecom space or IoT. Now it’s one of the industry leaders in both sectors.
INTC Stock: It’s Not Just Computers
Intel started the Open Connectivity Foundation that brings together companies to strategize how to work together to create value and demand for new IoT products. Its members include Cisco Systems, Inc. (CSCO), Microsoft Corporation (MSFT) and Samsung (SSNLF). And just recently, competitor QCOM joined the group as well.
The IoT market is just beginning to gain a foothold across industries, and it will be a game changer when it does. It will allow for smarter houses and cars, even toasters. It even has the power to change how we take care of our medical needs.
Recently, at the Mobile World Congress — the largest telecom event in the world — INTC announced partnerships with Ericksson (ADR) (ERIC), KT Corp (ADR) (KT), LG Electronics Inc., Nokia Corporation (ADR) (NOK), SK Telecom Co Ltd (ADR) (SKM) and Verizon Communications Inc. (VZ) to build the 5G network. All of these partners are major players in telecom infrastructure.
That means Intel has gone from having very little to do with 3G to being at the forefront of 5G. It shows, again, that INTC isn’t just paying lip service to the future — it’s a big part of building it.
Beyond all the technology, INTC stock currently is a bargain, at just 11 times next year’s earnings. And while Intel may not be the sexiest tech firm out there, it’s the most reliable, especially concerning its dividend payments. INTC has paid out a regular dividend since 1992, and its current payout represents just 40% of earnings, which is extremely sustainable.
And the growth we have been waiting for is just around the corner.
INTC stock is a rock-solid long-term pick that is on sale at this point.