This week’s Alpha Algorithm revisits one of the biggest tech names from the dotcom era: Intel Corporation (INTC).
With the rise of the FANG stocks (Facebook, Apple, Netflix and Google), old stalwarts like Intel lost their grip on tech investors’ imagination over the past decade. After years of neglect, this week marked the first time Intel appeared in a sufficient number of Alpha Algorithm strategies to become an official recommendation.
Santa Clara, California-based Intel Corporation (INTC) is one of the world’s largest semiconductor chip makers. The Company sells its products primarily to original equipment manufacturers, original design manufacturers, PC and network communications products users and other manufacturers of industrial and communications equipment.
Intel Corporation (INTC) versus the S&P 500 over the past three months
Eight Top Investment Strategies Betting on Intel Corporation (INTC)
- Fundamental Strength
This is a top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.
- Goldman Sachs’ Active Beta
The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.
- Value Tilt
Selected using a multi-factor modeling approach, the stock is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.
- Insider Sentiment
It is one of 100 equally weighted U.S.-listed large- and mid-cap stocks chosen based on trading in company stock by corporate insiders, price momentum and trailing 12-month volatility. Specifically, it looks at the increase in insider holdings.
- Capital Strength
The stock is part of a strategy that seeks to outperform the market by selecting companies based on the strength of their balance sheets, long-term debt ratios and return on assets (ROA).
- Large-Cap Alpha Core
The stock is one of a tiered equal-weighted index of large-cap stocks selected from the S&P 500 expected to outperform the broader large-cap space based on an intricate methodology of ranking stocks according to their recent performance.
- Deep Value
This strategy tracks an index of 20 stocks selected from the S&P 500. It identifies undervalued stocks using proprietary quality screens — positive earnings, dividends, etc. — and valuation metrics like enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA).
- Value Line 100
It is one of the top 100 stocks in the universe of 1,700 stocks for which Value Line gives a #1 ranking in the Value Line Timeliness Ranking System, based on expected price performance over the following six to 12 months.
Recommendation
So buy Intel (INTC) at market today and place your stop at $35.50. If you want to play the options, I recommend the January $39 calls (INTC180119C00039000), which last traded at $1.74 and expire on January 19, 2018.
Portfolio Update
Sell one-half of your Micron (MU) January $35 calls, which last traded at $6.30, for a 51.81% gain.
Raise your stop in Paypal Holdings Inc. (PYPL) to $62.40 to lock in at least a 15% gain.
Raise your stop in Berkshire Hathaway (BRK-B) to $180.65 to lock in at least a 10% gain.
Sincerely,
Nicholas A. Vardy
