Intel Corporation (INTC): Pay-TV? Makes Sense

Intel is expected to release its Q1, 2013 earnings on April 15. The company has unveiled positive earnings surprises in all of its last four quarters.

Fundamentally, there are a few positive factors for Intel Corporation (NASDAQ:INTC). Intel has a higher three-year average revenue growth of 14.9%, vs. the industry average of 11.9. It also boasts a higher operating margin of 27.4% and net margin of 20.6% vs. the industry averages of 22.7% and 17.1%.

Intel has a stronger ROE of 22.7 vs. the industry average of 20.2. Intel has lower P/E, P/B, and P/S of 9.9, 2.0, and 2.0 (vs. the industry averages of 23.6, 2.6, and 2.3), as well as a lower forward P/E of 9.9 (vs. the S&P 500’s average of 13.9).

From a cash flow perspective, Intel generates a strong cash flow of $18.88 billion, with a levered free cash flow of $4.48 billion, and currently offers an attractive annual dividend yield of 4.14%.

How to Invest

Intel Corporation (NASDAQ:INTC)’s solid fundamentals and strong cash flow should enable it to expand its growth into mobile or other growing markets. At current valuation, there is more upside potential than downside risk.

For bullish investors, consider a credit put option spread of June 22, 2013 $18/$20 puts, which will allow you to gain some upside credit premium, or to acquire INTC shares at a price below $20 upon options expiration.

Alternatively, for stock holders, covered calls on Intel Corporation (NASDAQ:INTC) remain a great strategy to boost income while providing limited downside protection. Investors can also review the following ETFs to gain exposure to INTC:

Market Vectors Semiconductor ETF, 18.76% weighting

Dow Jones U.S. Technology Index Fund, 4.54% weighting

QQQ, 3.64% weighting

Technology Select Sector SPDR, 3.12% weighting

Note: All prices are quoted from the closing of March 26, 2013. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

The article Intel: Pay-TV? Makes Sense originally appeared on Fool.com and is written by Nick Chiu.

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