Looking around the stock market on Friday, it's hard to find a stock in the red. U.S. equities are getting quite the lift following a vastly stronger-than-expected jobs report and more dovish Federal Reserve comments from Fed Chair Jerome Powell.
This bit of good news is helping give Intel (INTC) stock a lift, up about 5% to $46.75. However, there are some other positives that are likely aiding its rally.
Specifically, Bank of America/Merrill Lynch analysts upgraded the stock to a buy rating and slapped a $60 price target on the name, implying about 33% upside to Wednesday's closing price. While there are still concerns, analysts find Intel attractive based on valuation and its potential to generate free-cash flow growth.
Morgan Stanley analysts -- who assigned it a $55 price target on Dec. 19 -- also had some positive commentary Thursday. In particularly, they highlighted the company's "attractive exposure to growth trends" in areas like artificial intelligence, 5G, cloud computing and automotive.
Those looking at Intel surely have run into its competitors, Nvidia (NVDA) and Advanced Micro Devices (AMD) . However, unlike AMD and Nvidia, Intel stock has held up relatively well over the past three months. During that span, Intel is down just 4% compared to the 35% and 52% decline in AMD and Nvidia, respectively.
The stock has also vastly outperformed the Nasdaq, which is down 16.6% during the same span.
Part of that strength is likely tied to Intel's valuation. Even though estimates call for decelerating but positive growth in 2019, shares trade at just ~10 times this year's earnings. Intel also pays out a 2.6% dividend yield.
Trading Intel Stock
Shares of Intel tagged $56 in early June, but fell into a desperate funk for more than four months. The stock finally hit rock bottom in late October when they closed near $42. Shortly after, though, Intel rocketed higher and has been spending most of its time chopping between $47 and $49.
Over the last few weeks, we've seen an increase in Intel's volatility, although Friday's rally has it back to the bottom of that $47 to $49 range. Part of that volatility led to a decline in late-December, although it did not take out its lows from October. That's important as it allowed Intel to register a higher low, a constructive bullish pattern.
On the downside, it's also been putting in a few lower highs, a constructive bearish pattern. That leaves us with a tightening range (blue lines on the chart), which will ultimately force Intel stock to break one way or the other.
While Intel may be considered the "safest" of the chip stocks, it does have some relatively sluggish growth. That may make getting to $60 per share difficult, but if it can hurdle the $50 mark, a run to its former highs is certainly on the table.