Why Intel Corporation (INTC) Deserves To Be Bought, Now! – Apple Inc. (AAPL), Advanced Micro Devices, Inc. (AMD)

What I think will be Intel’s ace in the hole is the prospect of becoming Apple Inc. (NASDAQ:AAPL)’s mobile processor supplier. According to a report by Reuters released last week, the two companies have been in talks over the past year on that issue, but are yet to reach an agreement. Apple Inc. (NASDAQ:AAPL) is looking for alternatives to their current processors, which they design themselves but are manufactured by Samsung. Intel is the best in the business and I think Apple Inc. (NASDAQ:AAPL) realizes this. Just because talks have been going on for so long doesn’t mean much. Apple has historically taken its time in making large-scale business decisions.

I also think that this type of a deal will benefit Apple Inc. (NASDAQ:AAPL)’s shareholders, and I think the company knows this. There is no name more synonymous with quality in the chip-making business than Intel and the use of Intel processors in Apple devices like the iPad would be perceived as an upgrade from the current equipment, and may also lead to a bigger line of iPads, as they could conceivably be made with a variety of Intel processors, just like laptops.

In the microprocessor segment, Intel Corporation (NASDAQ:INTC) is the only viable investment. Advanced Micro Devices, Inc. (NYSE:AMD)’s share price has absolutely collapsed over the past year, and is 69.3% below its 52-week high at a time when the market is booming. Advanced Micro Devices, Inc. (NYSE:AMD) lost 16 cents per share and is forecast to post negative earnings for the next few years as well. While the company may indeed turn around, it is a speculative play at best.

Whether or not the Apple Inc. (NASDAQ:AAPL) deal happens anytime soon, I still think Intel is priced right for an investment now at just 10.1 times TTM earnings. The consensus calls for a forward growth rate of just 5%, but I think this is a ridiculously low estimate, even if their mobile business stays the same. With the improving economy, both individuals and enterprises will have more capital to spend on new computing equipment, and 80% of that equipment, as mentioned, features Intel Corporation (NASDAQ:INTC) processors.

The article Why This Chipmaker Deserves To Be Bought, Now! originally appeared on Fool.com and is written by Matthew Frankel.

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