by Ian Harvey
July 29, 2017
Intel Corporation (NASDAQ:INTC)
Here is an overview of Intel Corporation after reporting earnings. This options trade was recommended on Monday, July 24, 2017, with the company reporting on Thursday July 27; producing major potential profits within a very short period of executing the trade.
The Suggestion……from “Earnings Predictions for the Week Ahead”
Information from a trade given to “Cut-to-the Chase” members on July 06, 2017……..
Intel Corporation (NASDAQ:INTC), a designer and manufacturer of digital technology platforms, a large-cap value stock and member of the Dow Jones Industrial Average, have seen management make some horrendous mistakes in the past; but now, seem to have given it a better focus and better chances to succeed. Management has finally has lost a lot of its arrogance, and Intel's strategic vision has become better focused.
Intel is not just a chipmaker anymore. Rather, it is fast becoming one of the world's most sophisticated companies that deal with modern computing technologies. With a new era of computing unfolding rapidly, Intel is changing itself to lead the industry from the front. HPC (high-performance computing) and AI (artificial intelligence) are the future of computing, and Intel is a pioneer in these areas. However, the stock price doesn't reflect this. Instead, it continues to languish in a range – but there seems to be plenty of optimism that this is changing, and soon – particularly with the next earnings report coming up in a couple of weeks.
Intel Corporation shares have been stuck in the doldrums for the better part of three years now, but a bullish breakout could be in the works soon, according to a historically reliable options indicator – from the McMillan Analysis Corp., noting their computer generated Put-Call Ratio Buy Signal has been visually confirmed by INTC’s chart.
INTC’s put-call ratio has surged over the past couple of weeks, and is now at the highest levels seen in nearly a year. This means that bearish options bets (puts) on a volume basis are dominating those on the bullish (calls) side. This kind of imbalance usually ends with a big correction the other way. As the crowded trade unwinds, a sharp rally could result for Intel.
Intel has been a tremendous stock in terms of capital returns in the past several years. Renewed focus on the dividend and buybacks has led to tremendously high levels of capital being sent to shareholders in one form or another as Intel continues its maturing process.
Intel is in good shape and judging by the fact that its interest expense is still less than 6% of its operating income, Intel can afford a bunch more debt than what it currently has.
This means that Intel continues to have tremendous flexibility in terms of financing both acquisitions and buybacks going forward over and above its ability to produce FCF, which is quite strong in its own right.
Intel's low level of debt servicing costs relative to its operating income levels means that it can afford to reasonably double or triple the amount of interest expense it pays without undue stress on its earnings, provided that whatever it spends its proceeds on produces some sort of meaningful return.
Option trade to consider: Buy the INTC AUG 18 2017 35.000 CALL at approximately $0.70. Sell price is left to your own judgment.
Intel Corporation reported a profit for
its second quarter that rose compared to the same period last year.
The company said its bottom line totaled
$3.5 billion, or $0.72 per share. This was up from $2.9 billion, or $0.59 per
share, in last year's second quarter.
Analysts had expected the company to
earn $0.68 per share. Analysts' estimates typically exclude special items.
The company said revenue for the quarter
rose 9.6% to $14.8 billion. This was up from $13.5 billion last year.
There's no other way to put it: Intel
did extremely well this quarter, and 2017 is shaping up to be quite a good year
for the company.
Shares of Intel touched a high on Friday of $35.86, on the back of positive quarterly results.
Since June, INTC had a 10% correction that finally turned around a couple of weeks ago. But coming into the earnings, the stock was coming up on pivotal level of $35 per share, which was the neckline for a large bearish head-and-shoulder pattern so it was important they take it back. This is a good start towards accomplishing that.
Within four days this trade produced a potential profit of 162%!
ACTION TO TAKE
The results say it all!