Following a well-received earnings beat does Intel (NASDAQ:INTC) deserve a spot in your portfolio? Let’s dive into what’s happening off and on the price chart.
INTC stock bears fearful of the impact of President Donald Trump’s trade war on the chip giant or competitive threats from the likes of Advanced Micro Devices (NASDAQ:AMD) were dealt a solid blow last week after the company toppled Wall Street estimates for its third quarter and issued encouraging guidance.
Intel blew past estimates of $1.24 per share with actual earnings of $1.42. Similarly, sales of $19.2 billion also easily beat forecasts of $18.1 billion. Importantly, Intel’s second-largest business the Data Center Group and its cloud segment, which support large companies like Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT), also beat views and saw a return to growth.
Looking ahead, Intel’s management lifted its full-year earnings guidance to $4.60 per share. That’s above consensus estimates of $4.39. At the same time, total revenues of $71 billion compare favorably to estimates of $69.4 billion. That total revenue figure also offers modest annualized growth of 0.2%.
To be clear, threats still exist for INTC. The company recently slashed its CPU chip prices to counter an aggressive AMD strategy. There’s also been missteps involving Intel’s 14-nanometer chips. And of course the U.S.-China trade war still lurks in the background. But overall, a positive case for owning INTC stock has been reaffirmed off and on the price chart.
INTC Stock Price Monthly Chart
The price for waiting for earnings to reaffirm a recently discussed bullish INTC stock chart is a slight trade-off in value for potential growth. The fact is Intel still sports a decent price-to-earnings ratio and healthy 2.2% dividend to boot. Now, with Intel’s stronger business prospects in hand, buying into the modestly bullish channel pattern with an eye on an eventual breakout appears more secure.
Specifically, Intel shares have established a healthy consolidation of nearly 1.5 years in duration around the stock’s prior dividend-adjusted high set back in 2000. With the monthly stochastics beginning to trend higher from an oversold condition and a good visual track record of shares rallying during this type of setup, going long INTC stock makes sense.
Positioning in INTC Stock
I’d recommend buying INTC stock today on the strength of the monthly chart and its potential for a breakout. Given the size of the pattern, I’d conservatively estimate $70-$75 as an initial upside target for shares.
To minimize risk, I’d suggest an initial blended exit of $50.75. This amounts to exposure of roughly 12%, as well as sufficient technical leeway on the price chart for closing the position if needed.
Investment accounts under Christopher Tyler’s management currently own positions in Advanced Micro Devices (AMD) and its derivatives but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
