Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Intel Corporation (INTC): Three Reasons to Own This Tech Stock

Page 1 of 2

As the U.S. economy recovers from the worst recession in decades, cyclical sectors of the market are looking attractive. These industries are comprised of businesses closely tied to the swings of the economy, whose products are bought more or less frequently depending on broader economic conditions.

One cyclical sector is technology, which corporate and individual customers should spend more money on in an improving economy. However, industry giant Intel Corporation (NASDAQ:INTC) has seen its stock price languish over the past year amid disappointing sales and profits in recent quarters.

Intel Corporation (NASDAQ:INTC)

At the same time, Foolish investors understand the long-term opportunities that arise from buying when there’s blood in the streets. To that end, here are three reasons Intel remains a steal at its current price.

Reason #1: It’s really cheap

Many technology stocks, including Intel Corporation (NASDAQ:INTC), trade at a significant discount to the broader market. The S&P 500 Index trades for about 15 times its estimated 2013 earnings. Several large-cap technology stocks, meanwhile, trade for much lower multiples. Industry giants Microsoft Corporation (NASDAQ:MSFT) and Cisco Systems, Inc. (NASDAQ:CSCO), and Intel exchange for just 11 times forward earnings.

Of course, cheap stocks are usually cheap for a reason. Cisco is in the middle of a turnaround. The company is undergoing a number of changes, including ditching non-performing products, after years of disappointing financial results.

It seems as though the company is getting itself back on the right track. Cisco’s quarterly net sales increased 5% year over year and GAAP earnings per share increased an impressive 15% versus the same period in 2012.

Microsoft Corporation (NASDAQ:MSFT) and Intel Corporation (NASDAQ:INTC), meanwhile, trade for 11 times forward earnings, much lower than where the broader market trades. Moreover, since technology firms typically churn out lots of cash with little debt on the books, Intel looks even cheaper on a trailing basis.

Intel’s enterprise value to EBITDA multiple is just 5.5 times.

Both Microsoft and Intel Corporation (NASDAQ:INTC) suffer from the same pervasive fear that the personal computer is dead. However, Intel has made meaningful strides in this area, which brings us to reason number two.

Reason #2: It’s no longer chained to the PC

For Intel, the fear that the chip giant missed the mobile boat has served as an anchor on the stock. It’s true that Intel Corporation (NASDAQ:INTC) has turned in poor performance in recent periods. The company’s most recent quarterly revenue and earnings fell 2.5% and 25%, respectively, versus the prior year’s results.

For Microsoft Corporation (NASDAQ:MSFT)’s part, despite the criticism, the company is still immensely profitable and is a cash cow. Even in a difficult environment for PCs, Microsoft booked more than $20 billion in revenue and $6 billion in net income during its most recent fiscal quarter.

In addition, Microsoft Corporation (NASDAQ:MSFT) has a fortress balance sheet. The company is one of only four to hold a triple-A credit rating from Standard and Poor’s. At the end of its most recent quarter, Microsoft held nearly $75 billion in cash, equivalents, and short-term investments.

Whether the personal computer is akin to buggy whip technology remains to be seen. But Intel investors should take comfort in the fact that at long last, Intel Corporation (NASDAQ:INTC) appears to be gaining traction in getting its chips in mobile devices.

First, at a technology conference in Taiwan earlier this year, Samsung Electronics revealed that it will use Intel processors to power a new version of one of its main Android tablets. In total, Intel officers said they expect more than 30 tablets to use the company’s processors next year.

Then, on June 28, Intel Corporation (NASDAQ:INTC) executives said the company plans to speed up development and rollout of its Atom chips for use in mobile devices.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!