It’s a tough investment market for anyone still interested in equities, and so for those of us wary but willing a good tech stock in these uncertain times is Intel Corp (Intel Corporation Stock Quote, Charts, News, Analysts, Financials NASDAQ:INTC). So says Brian Acker of fund managers Acker Finley, who just nominated Intel to his Top Picks list for the next 12 months.
Tech stocks had a positive set of trading days overall during this last week of May, a nice change of pace from the ongoing rout which is heading into its sixth month. The NASDAQ index is up over five per cent for the week as of midday Friday, with stocks like Apple and Amazon up eight and six per cent, respectively.
The welcome respite is in contrast to the poor showing by tech and the market in general in 2022, where the tech-heavy NASDAQ is now down a whopping 24 per cent year-to-date while the broader S&P 500 is down about 14 per cent. North of the border, the relative strength of Canadian energy and bank stocks have kept the overall market afloat, with S&P/TSX Composite looking to finish the week up about two per cent while its showing so far in 2022 is a negative return of just under three per cent.
In the technology space, investors have been pouring out of stocks since last November as concerns persist over rising interest rates, rising inflation and economic challenges related to supply chain and post-pandemic recovery. That’s done a number of many stocks whose share prices are down by a third or more over the past six months.
But the drop for chip-maker Intel has been less pronounced, with INTC losing around 12 per cent of its value since mid-November. The stock is down a greater 23 per cent over the past 12 months but even that is in relative terms pretty good.
It’s those kind of Steady Eddy results which investors should continue to see from Intel, says Acker.
“When people follow me they shake their heads on Intel — I’ve recommended it for 20 years, but it’s [currently trading] close to $40.20 and we have a model price at $57.47. That’s a 36 per cent upside and it pays you 3.5 percent,” said Acker, speaking on BNN Bloomberg on Thursday.
“This company is trying to turn [things] around, but in this environment you’re not going to lose much. You’re going to get paid three and a half percent, so it’s a good bear market stock to have,” he said.
“A lot of their losses, I think most of them are are manageable. So yeah, I would pick away at Intel,” Acker said.
The largest semiconductor chip company in the world, Intel’s to’s and fro’s are industry bellwethers at a time when the global chip shortage is still a reality and supply chains remain constrained. Last month, Intel said the worldwide supply of computer chips would likely continue for another couple of years, blaming equipment shortages and factory closures as main culprits.
“We expect the industry will continue to see challenges until at least 2024 in areas like capacity and tool availability,” said Intel CEO Pat Gelsinger on the company’s fiscal second quarter conference call in late April.
Intel recorded slight top and bottom line beats of consensus estimates in its 2022 Q2 but revenue was down seven per cent year-over-year to $18.4 billion with tougher comparisons to last year’s numbers partly at issue. Intel’s Q2 net income was up 141 per cent to $8.1 billion and EPS was $1.98 per share.
“Q1 was a strong start to the year, exceeding expectations on both the top- and bottom-line,” said Gelsinger in an April 28 press release. “With a $1 trillion market opportunity ahead of us, we remain laser focused on our IDM 2.0 strategy. We executed well against that strategy in Q1, delivering key product and technology milestones and announcing plans to expand our manufacturing capacity in both the US and Europe to meet the continued demand for semiconductors and drive a more balanced, resilient global supply chain.”