Do the Charts Point to a Breakout for Intel Stock? 

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Shares of Intel (NASDAQ:INTC) have been struggling since disappointing investors in April. However, INTC stock has been clawing its way higher — albeit in a slow but sure manner.

INTC Stock: Do the Charts Point to a Breakout for Intel?
Source: JHVEPhoto / Shutterstock.com

That brings us to a key question: Is now the time to get long INTC or should investors take a pass? 

The charts are setting up for a potential breakout as we head into the fourth-quarter earnings season. But even more so than Intel stock’s individual setup, the semiconductor space is starting to trade much better too. 

Let’s start with the charts. 

Trading INTC Stock

Trading INTC Stock
Source: Chart courtesy of StockCharts.com
Glancing up at the daily chart above and a few things are immediately evident. 

First, the gap-down action from April left a gaping hole between $52 and $57. Next, shares continue to put in a series of higher lows, a bullish technical signal highlighted by the blue line and purple arrows on the chart. Finally, resistance comes into play near $53. INTC stock is holding up over all of its major moving averages as well.

Those are the more obvious takeaways. But upon further inspection, we notice a few more nuances. 

As shares continue to trend higher and get rejected by resistance, INTC is setting up in what’s known as an ascending triangle. That’s a bullish technical pattern that has traders looking for a breakout higher. Further, you’ll notice that $53 resistance also happens to be the 61.8% retracement. 

Based on these observations, we’re looking for one of two things: A breakout over $53, or a breakdown below trend or below the recent low. 

A breakout over $53 and the 61.8% retracement could send INTC stock up to the 78.6% retracement near $56. Above that and the gap-fill up to $57 could be in the cards, with the current high at $59 being the next upside target. 

On a pullback, it would be discouraging to see the 50-day and 200-day moving averages at $49.37 and $49.07, respectively, fail to support Intel stock. Below the recent low of $48.53 and uptrend support near $47 is on the table. 

Valuing Intel Stock

Unlike the bullish-looking charts, Intel does not have a very attractive growth profile. In fact, management’s multi-year outlook in May is what hit the stock so hard to begin with.

As such, analysts expect revenue to fall 2.1% this year to $69.37 billion. It leaves INTC stock trading at 3.3 times this year’s revenue. In 2020, estimates call for growth of 2.3%. Ultimately, estimates for 2020 are barely above Intel’s 2018 sales figure ($70.9 billion vs. $70.85 billion). 

On the earnings front, estimates call for a 4.3% decline this year to $4.39 per share, before a rebound of just 1.4% in 2020. Based on this year’s estimates, Intel stock trades at less than 12 times earnings. That’s attractive to many investors, as is its dividend yield of 2.5%. 

That said, Intel’s growth is somewhat dismal given that the economy is doing well and technology continues to evolve at a rapid pace. While some of its competition is getting hit harder on growth this year, estimates call for a much more dramatic rebound next year. As it stands, Intel is looking at almost flat growth over a multi-year period. 

Bottom Line

Chasing Intel stock is tough here. Semis are making a potential comeback and that’s good for INTC stock. But there are other more attractive players in the space. Nvidia (NASDAQ:NVDA) has far better growth prospects for calendar year 2020, while Advanced Micro Devices (NASDAQ:AMD) has superior revenue and earnings growth compared to both stocks. 

Admittedly, Intel stock has the best dividend and lowest valuation, but investors have seen a lot of volatility despite those attributes. Over $53 and INTC is attractive to me on the long side. But as it stands, AMD and NVDA are more enticing. 

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVDA.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.


Article printed from InvestorPlace Media, https://investorplace.com/2019/10/charts-point-to-breakout-for-intel-intc-stock/.

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