Once a top tech stock, Intel (NASDAQ:INTC) has had a rough year. The pandemic has been kind on tech stocks, but competitors haven’t. INTC stock faced massive competition in recent years, and it has led to a decline in the market share.
Intel stock hasn’t moved much in the past year. It was trading at $50 in December 2020 and is at the same level today. In October, I wrote about the stock continuing the downward journey and I think anything below $50 is a good entry point.
The stock did see a few ups and downs during the year and went as high as $68 in April this year. Intel is a strong company and it is not fair to write it off just yet. The company has a lot planned for the coming year which may take INTC stock higher.
With that in mind, let us take a look at two reasons to bet on the stock.
A New Chip Facility In Malaysia
Intel is all about chips and the chip shortage has been troubling several industries this year. The company is planning to invest billions in a new chip facility in Malaysia with an aim to expand production across the world and alleviate the chip shortage.
Intel will spend more than $7 billion for the chip packaging and testing factory. The Malaysian factory could start production in 2024 and it could change the future of the company. The management plans to spend around $25 billion to $28 billion on the building of the manufacturing facilities in order to become a larger player in contract manufacturing over the years.
This is a well-planned and well-timed investment that can generate millions in revenue for Intel. There are huge challenges due to the chip shortage and we can see a rise in global demand for chips. Intel will be able to make the most of this opportunity and cash in on the growing demand.
Mobileye Could Change the Game
Intel plans to take the Mobileye business public next year and this move will allow the company to raise cash for the manufacturing plans. It is expected that the company will announce the public offering mid-next year for a valuation of $50 billion. Intel has adequate cash to manage the business expansion and the company believes that it can handle the expansion strategy without the transition of going public. The company had purchased Mobileye in 2017 for $15.3 billion.
Mobileye is already a market leader in autonomous driving solutions and expects to deliver 40% more revenue in 2021 as compared to 2020. It is a hidden jewel that Intel has and it could transform the business of the company. The company is making the right move to capitalize on the asset and it will benefit the bottom line.
The Bottom Line on INTC Stock
I believe Intel is already a strong, well-established company and with these two moves, it will be able to handle the chip shortage well. The chip shortage may last beyond 2022 and companies need to rethink their manufacturing strategy to ensure that they do not lose out on the revenue and customers due to the shortage. With the new manufacturing unit in Malaysia, Intel will be able to handle the situation without losing a lot of money.
INTC stock may not be at the top yet, but the future looks bright and Mobileye could turn out to be more successful than it is today. Do not forget the fact that Intel is a dividend-paying company and as my InvestorPlace colleague Mark Hare writes, Intel could be worth 20% more if it raises the dividend by 5%.
Considering all the factors, INTC stock looks fairly valued with a strong potential to grow in mid-2022.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.