Time to Put Intel Corporation (INTC) Inside Your Portfolio?

Intel’s CDS continues to fall

Intel’s credit default swaps (five years, in USD) continued their downward trend during 2013: They have declined from nearly 58 back in December 2012 to nearly 49 as of the beginning of May. This is a 16% drop. The current price means the annual premium is $49,000 in case of a default of $10 million of debt within the next five years. The chart below shows the developments of the five-year CDS price during 2013 (daily prices).

The drop in the company’s CDS implies the market estimates Intel’s risk of default is falling. Moreover, the sharp recovery in the company’s stock price may have also contributed to the drop in CDS.

The Foolish bottom line

Intel’s new processors might just be the game change the company has been trying to achieve in the past several years. I think part of the optimism in Intel Corporation (NASDAQ:INTC)’s new chips is reflected in the recent rally in the company’s stock price. But I think the company might still be undervalued. If the new chips significantly augment the company’s market share in mobile and tablets and reignite the demand for laptops and Ultrabooks, this could sharply pull Intel’s market value higher.

Lior Cohen has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and QUALCOMM, Inc. (NASDAQ:QCOM).

The article Is It Time to Put Intel Inside Your Portfolio? originally appeared on Fool.com.

Lior is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.