Intel Corporation (NASDAQ:INTC) — This designer and manufacturer of digital technology platforms was last reviewed by me on June 9, when I recommended it as a buy “under $31” with a trading target at $37. The target was achieved on Sept. 16, when it gapped to open at over $37.50.
Prior to the June 9 report I suggested Intel “as a solid long-term investment for participation in the upcoming results provided by 5G technology.”
Longer-term investors who, as a result of that report, purchased Intel in February at $27.50 are encouraged to continue to hold it as a long-term cornerstone investment in the technology sector.
In mid-October, Standard & Poor’s retained its four-star buy rating on Intel’s stock, reflecting an improvement in fundamentals through 2016 and 2017. Data Center growth has not been as robust as expected, but higher cloud growth and the recent introduction of Intel’s Broadwell-based servers have exceeded expectations and are the basis of an increase in S&P’s earnings forecast.
A steady increase in cash flow will likely enable Intel stock to hike its dividends and share repurchase plans. This year more than half of total profits are resulting from non-PC markets, and S&P expects this trend to accelerate. Thus they have increased their 12-month target by $2 to $41 based on a peer-average price-to-earnings ratio of 14.7X their 2017 estimate of $2.79, up from $2.63 in 2016.
Following the March high at $32.75, INTC consolidated around its 50- and 200-day moving averages but broke to under $30 in mid-May. The break formed the bottom of a Cup which evolved into a bullish Cup-&-Handle formation.
A breakout on July 7 signaled an advance to Intel stock’s high of the year and a triple top at about $38. The top was confirmed in mid-October when support at the 50-day moving average was crushed by a gap down from $37.53 to $36.09. The short-term sell-off continued until the trend stabilized last week, signaled by a double bottom and CBR Buy signal, just above its 200-day moving average.
Yesterday a new MACD buy signal and a break above the 20-day moving average (green line) confirmed that a likely bottom has formed. Thus traders might profit from a full reversal, buying the stock at under $35 with a trading target of $40 for a trading profit of over 14% in 90 days.