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Why I Am Buying Intel Into Earnings and Beyond

Stocks in this article: INTC

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- I'm not a big fan of buying or shorting stocks ahead of earnings. As a long-term investor, it's just not in my blood. That said, if I am long a stock prior to earnings, I stay that way beyond the report, even on weakness, assuming the long-term story of the company remains intact. If, however, I were to trade this earnings season, I would seriously consider doing it with Intel (INTC).

Intel reports after the close on April 17. I am long INTC and will increase my regularly scheduled buy next week ahead of the call. If the stock drops post-earnings, I will buy the dip. I am also considering entering in-the-money January 2014 INTC LEAPS calls. That's a favored strategy I often discuss in my Options Investing Newsletter. I scale into LEAPS the same way I do stocks.

For instance, in this case, I might open a small position (one or two contracts) prior to earnings. I will wait for some weakness over the next several weeks post-earnings. If my calls react to the downside, I will buy a couple more until I have five-to-10 contracts by the end of the year. I will let them ride and hope to unload them, for a profit, somewhere around the middle of 2013, if not sooner.

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I am bullish Intel for several reasons. First, I like the modest dividend. It has the potential to continue moving higher. Second, I love what Intel is doing right now. With the exception of Apple (AAPL), it dictates the trajectory of the PC business to the PC makers. Intel's investment in the ultrabook should pay off, as consumers look for lower-priced, but still credible Macbook alternatives. We might see that decision start to pay off for Intel on this report. There's something, however, I love even more about Intel. It's not content with owning the present; the company has a keen eye on the future.

Consider these recent developments involving the company:

  • Feb. 29: Intel Capital to Invest in Future of Automotive Technology
  • March 13: Intel Developing New Web-Based TV Service
  • April 11: Chip Shot: 'Inside the Music': Intel First to Go Behind the Scenes of Pandora Music Genome Project
  • April 11: Pandora and Intel Unveil "Inside the Music" Program
  • The quotes from Intel executives from two of the February and April press releases tell investors much of what they need to know. Intel will not rest on its laurels. The company just "gets it."

    "Technology has become an integral component of everyday life, with consumers demanding uninterrupted access to the Internet and the constant flow of information, news, entertainment, and social media," said Arvind Sodhani, president of Intel Capital and Intel executive vice president. "Automobiles must be able to provide these same consistent and engaging computing experiences, but in a safe manner. The Intel Capital Connected Car Fund will drive the development of technologies to enhance the in-vehicle experience of the future."
    "Entertainment, and specifically music, will be a big push for us in our advertising focus in 2012. We're targeting a younger audience than we have in the past as we feel they tend to influence not only like-minded individuals, but also those outside their direct peer group. To be effective with that audience we need to help create experiences for them that are compelling and worthy of sharing across their social graph. As the first brand to bring the Pandora Music Genome Project to life through the Inside the Music program, we are creating a memorable music experience for consumers," said David Veneski, U.S. Media Director, Intel.

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