Investidea: Intel, because change is coming

Investidea: Intel, because change is coming

Today we have a moderately speculative idea.: take shares of the American technology company Intel (NASDAQ: INTC), in order to capitalize on the rebound of its shares after the recent fall.

Growth potential and validity: 14% behind 14 Months; 59% behind 3,5 of the year. All excluding dividends.

Why stocks can go up: в бизнесе компании намечаются позитивные изменения.

How do we act: take now 55,15 $.

When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

No guarantees

Our reflections are based on the analysis of the company's business and the personal experience of our investors, but remember: not a fact, that the investment idea will work like this, as we expect. Everything, what we write, are forecasts and hypotheses, not a call to action. To rely on our reflections or not – it's up to you.

And what is there with the author's forecasts

Research, like this and this, talk about, that the accuracy of target price predictions is low. And that's ok: there are always too many surprises on the stock exchange and accurate forecasts are rarely realized. If the situation were reversed, then funds based on computer algorithms would show results better than people, but alas, they work worse.

So we're not trying to build complex models.. The profitability forecast in the article is the author's expectations. We specify this forecast for the landmark. As with the investment idea in general, readers decide for themselves, it is worth trusting the author and focusing on the forecast or not.

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What the company makes money on

В 2020 мы публиковали подробный разбор бизнеса компании, so let's not repeat ourselves.

Investidea: Intel, because change is coming

Arguments in favor of the company

Fell down. Акции компании сильно упали в этом году: with 68,26 $ in April 2021 to 50,99 $ in November 2021. Но ничего особенно страшного не произошло: the company's business is quite successful and in demand and it is inexpensive - P / S about 2,5, a P / It's about 11. Так что вполне можно взять эти акции в расчете на их отскок.

Room for improvement. Yesterday it became known, что компания планирует сделать свое подразделение высокотехнологичных решений для автомобильного сектора Mobileye отдельной компанией и выставить ее торговаться на бирже. Sector indicators 2020: выручка 967 млн долларов и операционная прибыль 241 млн.

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О цене говорить рано, but, probably, Intel сможет неплохо заработать на этом. Considering, that the unit is profitable, its capitalization may be more than 50 billion. By the way, Intel купила Mobileye в 2017 за 15 млрд.

This news came out in the context of pressure from activist investors from the Third Point fund on the company's management: Intel shares have been treading water for the past few years., притом что бизнес у Intel неплохой. Think, that everything will not end with the withdrawal of Mobileye to the exchange and other positive changes are ahead of us, that will lead to the growth of Intel shares.

Wrecked. Intel pays 1,39 $ dividend per share per year, что сейчас дает 2,51% per annum. The company spends $5.679 billion a year on dividends, roughly 26,91% from her profits for the past 12 Months, - so that payments may well double. Moreover, this fits into the policy of appeasing investors-activists by the management of the company..

Но даже те дивиденды, what already is, can attract many fans of passive income into the company's shares, why stocks rise. After all, by the standards of the technology sector 2,51% per annum is a huge profit.

What can get in the way

Customer concentration. According to the annual report, only three clients give a little less than half of the company's revenue: Dell — 17%, Lenovo — 12% и HP — 10%. Reconsideration of relations with one of them can be very bad for Intel.

Как-то в целом. AMD rivals overtake Intel on corners, вынуждая последнюю инвестировать в расширение и развитие собственных технологических мощностей. This significantly reduces the likelihood, that Intel may dramatically increase dividends in the near future.

May be, Intel will even cancel dividends for higher goals, how Western Digital did it. Moreover, there is a good reason for this.: the company plans to spend $100 billion in the foreseeable future to develop production, and its accounting department is burdened with 77.875 billion debts, of which 29.572 billion must be repaid within a year. В распоряжении Intel не так много денег: 7,87 billion in accounts plus 8.4 billion debts of counterparties.

Truth, considering also other liquid assets of Intel, то суммы в ее распоряжении оказываются более значительными — больше 40 млрд долларов. But, учитывая планы компании по обновлению основных фондов, payments may well cut. And without dividends, these shares will lose a significant part of their attractiveness..

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Well, in general, the rivalry with AMD will absorb all the strength of Intel and slow down the growth of its quotes..

What's the bottom line?

Shares can be taken now by 55,23 $, а дальше есть два варианта:

  1. wait, When will the company's shares be worth 63 $. Think, we will achieve this result in the following 14 Months;
  2. if you took shares for a long time, then you can now buy them with an eye on that, what is the third point for these 3,5 year will force Intel management to increase payments or take other steps, способствующие улучшению ситуации со стоимостью акций. This should lead to a significant increase in quotes..

It also does not hurt to look at the news section of the company's website, in order to have time to sell shares on the St. Petersburg Exchange before, like american, а вслед за ними и российские инвесторы успеют отреагировать на новости о сокращении или отмене дивидендов.

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