Don't Take Profits in Intel Yet
It's tempting to sell Intel (INTC) - Get Report shares at current levels.
The stock, which now trades at six-month highs, has seesawed between $30 and $35 for the past 12 months. The historic trend has been that the stock will move back lower, but it would be mistake to take profits now. This is despite the 9% gains it has delivered since my buy recommendation on April 18.
Even at its six-month high, Intel stock trades on the assumption of little to no growth. The stock is priced at just 14 times earnings estimates of $2.42 per share, compared to a forward price-to-earnings ratio of 16.5 for the average stock in the S&P 500 (SPX) index.
At current levels, the stock is just $1 below analysts' consensus price target of $35.
Intel will report second-quarter earnings on July 20. If it beats and raises guidance, analysts will be forced to raise their price targets.
From a technical perspective, the chart below has no bearish trends.
Intel shares closed Friday at $34.00, up 2.41%. But even with its recent gains, including a 6% rise over the past month, the stock is still down 1.31% year to date, compared to the 4.21% rise in the S&P 500 index. The stock was making up for lost ground.
The shares, which have bounced 15% from their support level of $29.50, have now risen well above their critical 20-day ($32.24 -- blue line), 50-day ($31.33 -- pink line) and 100-day ($31.29 -- yellow line) moving averages.
The trend now points to a sustained upward move toward resistance at around $35.10. This would then turn what was once resistance at $32.20 into support.
By making higher highs and higher lows, Intel has driven the bears away. And with new growth prospects now on the horizon, including chip placement in new iPhones due out this fall from Action Alerts PLUS holding Apple (AAPL) - Get Report , the seesaw trend Intel investors have suffered through could be over.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.