Intel: A Defensive Tech Stock Worth Owning in 2022

INTC stock - Intel: A Defensive Tech Stock Worth Owning in 2022

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Intel (NASDAQ:INTC) has been moving lower in 2022. INTC stock hasn’t collapsed, unlike much of the tech sector. However, shares are still down 20% year-to-date. With the decline, Intel shares are back to near their lowest levels in recent times. The stock was going for $40 in early 2018 and is once again approaching that level. However, while the stock price has retreated, Intel’s business has advanced considerably over that same time period. This could create an opportunity for investors to buy one of the tech industry’s most profitable giants at an attractive entry point. Here are a couple of reasons that support a bullish argument for Intel.

For one thing, Intel isn’t nearly as stagnant as its critics would suggest. The company grew earnings from $1.99 per share in 2017 to $4.86 in 2021. That’s more than a double. Intel’s earnings were above $4 per share in 2019 and 2020, as well. This indicates that 2021’s profits weren’t just driven by a temporary demand surge. Globally, in 2021, the total sales of desktops, laptops, and tablets combined topped 500 million units. That overall figure has been fairly stable over the past decade and Intel has a large portion of the overall market share on those chips. Its business for servers is another robust and reliable cash cow.

With its massive sales base and strong profitability, Intel is able to reinvest heavily in next-generation products. Intel spent $15.2 billion on research and development (R&D) in 2021, which was far beyond what its immediate rival AMD (NASDAQ:AMD) spent for their own R&D operations. This tends to ensure that Intel remains competitive on a technological basis with rivals. Admittedly, Intel has not done the best job of execution in terms of improved product designs in recent years, but with that large of a spending advantage, it should regain technological parity in due time.

Intel also has other features that make it attractive, such as its investments in other fields. The company acquired self-driving vehicle technology firm Mobileye years ago, for example, and is planning to take the company public to start to monetize its gains there. That said, with the dreadful market for tech stocks, Intel may wait on unveiling that initial public offering. Regardless, it shows the sort of other levers that Intel has to drive value beyond the core business.

Additionally, Intel stands out as a value play. With investors shunning tech stocks that sell at high multiples, Intel is a compelling alternative. The stock is going for just 2 times revenues and 12 times forward earnings. On top of that, INTC stock currently offers a 3.32% dividend yield. In tough times for the tech industry, Intel looks like an appealing safe harbor to ride out the storm.

On the date of publication, Ian Bezek held a long position in INTC stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/intel-a-defensive-tech-stock-worth-owning-in-2022/.

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