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Buy Intel Ahead of Earnings

Given these new ambitions, I believe it's premature to count Intel out. Along those lines, I still believe that Intel's true growth potential will reside in mobile. This is not to discredit management's goals in entertainment. But I don't believe that Intel's pedigree in home theater can rival what Apple and Google are able to do.

Plus, when you factor in Microsoft's (MSFT) Xbox One and Sony's (SNE) existing dominance in entertainment, Intel's aspirations seem "reaching" -- to put it mildly. With that in mind, I expect management to maintain focus on growing product development and advancing better volumes in its chips business, which should spur Intel's profitability.

Though Qualcomm and ARM Holdings may be out of Intel's league at the moment. Intel still has distinct advantages over the likes of NVIDIA (NVDA) and Advanced Micro Devices (AMD). Plus, management has positioned Intel to capitalize on emerging markets. And I believe that this is where investors should begin to focus their attention.

The emerging markets are where most of the company's growth should be in the next few quarters. This is one of the main reasons that I'm bullish on Intel's core capabilities -- namely in areas like security and the cloud. What Intel needs is more time. The company will eventually recapture its magic and prove that is can increase its margins and outperform expectations.

In the meantime, from an investment perspective, I believe that the stock is trading for less than its fair market value, which I have estimated to be right around $32 per share. (Shares were changing hands Tuesday morning at $24.19.) For value investors with patience, the stock is a buy at this level ahead of earnings.

At the time of publication, the author was long AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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