This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

How to Trade Intel

Stocks in this article: INTC

NEW YORK ( TheStreet) -- Intel (INTC) is one of the most important of the more than 7,000 stocks that we follow at www.ValueEngine.com.

After all, Intel is a key component of the Dow Jones Industrial Average, the S&P 500, the Nasdaq and the Philadelphia Semiconductor Index (SOX).

Intel has been generally upbeat about the prospects for the global economy, but this week Intel's much smaller competitor Advanced Micro Devices (AMD) trimmed sales guidance. Intel will report second-quarter earnings on July 17 after the close. The consensus calls for Intel to earn 52 cents per share.

Despite weakness in the semiconductor industry, Intel on July 9 announced that it reached an agreement with ASML Holdings (ASML) to provide $1.0 billion to fund research in the development of new technologies for 450-millimeter wafers and extreme ultraviolet lithography for the next two years. In addition, Intel will purchase 10% of ASML worth about $2.1 billion and commit to another 5% after the initial transaction is completed.

Intel appears to be building for the future even as PC shipments continue to be sluggish. The second quarter was the seventh consecutive quarter of anemic growth in semiconductor demand.

On June 25, I wrote Semiconductor Stocks Key Economic Growth." Since then, economic weakness in Europe has continued to be sluggish. In addition, industry experts report better interest in tablets than PCs.

The benchmark I use for the semiconductor industry is the Philadelphia Semiconductor Sector Index. The SOX ended June below its five-month modified moving average at 396.00, and this made the monthly chart profile negative as the second half of 2012 began. As I mentioned on June 25, this is a warning of slowing global economic growth.

The SOX (359.67) is down 1.3% year to date, while the Nasdaq is up 10.9%. The SOX is only 11.6% above its Oct. 4 low of 322.24 compared to 25.6% for the tech-heavy Nasdaq. The SOX is 24.2% below its February 2011 high at 474.33.

Source: Thomson Reuters

The daily chart for the SOX is negative with a declining momentum (12x3x3 daily slow stochastic) reading, and it's trading below its 21-day, 50-day and 200-day simple moving averages at 375.39, 378.08 and 390.79. Note that strength on June 20 and July 3 tested and failed at the 200-day moving average. My weekly value level is 350.70 with my semiannual value level at 326.30, which is just above the Oct. 4 low.

Intel ($25.39) is rated a buy, according to ValuEngine, with fair value at $29.78. This makes the stock 14.2% undervalued. The ValuEngine one-year price target is $27.76. Intel has held up better than the SOX with a 12-month gain of 14.5% and an average annual gain of 1.6% over the past five years. The forward price-to-earnings ratio is a cheap 9.7.

The daily chart for Intel shows declining momentum with the stock below its 21-day, 50-day and 200-day simple moving averages at $26.56, $26.59 and $25.82, respectively. My semiannual value level is $21.14. The weekly value level is $24.95, and quarterly, monthly and annual risky levels are $27.12, $28.37 and $30.58, respectively.

Source: Thomson Reuters

At the time of publication, Suttmeier had no positions in stocks mentioned.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,614.81 +215.14 1.31%
S&P 500 1,941.28 +37.27 1.96%
NASDAQ 4,419.4780 +103.4040 2.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs