“Armchair Trader Series” Recommendations
- Week Beginning -
Monday, December 31, 2018

by Ian Harvey

IMPORTANT NOTE: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

You may also wish to read Stock Options Made Easy Trading Philosophy

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"Trading Capital Management"



Option Trade – Intel Corporation (NASDAQ:INTC) Calls

Wednesday, January 02, 2019

** OPTION TRADE: Buy the INTC APR 18 2019 48.000 CALL at approximately $2.70. Place a pre-determined sell at $5.40.

Also include a protective stop loss of $1.10.

Stocks were due for a bounce after such heavy selling; and the Dow Jones, S&P 500 index and Nasdaq composite have provided by rebounding since Christmas. 

And with a tentative stock market rally underway a follow-through with positive up-days is needed to confirm this further. The Dow Jones futures reversed sharply lower Tuesday night, along with S&P 500 futures and Nasdaq futures, as a China manufacturing index signaled contraction for the first time in nearly two years – but as we know, overnight action doesn't necessarily translate in actual trading in the next regular session.

Also, President Donald Trump has been busy, which continually sets the tone of the market direction…..he has.....

  • …..invited congressional leaders to the White House, and tweeting Sunday "let's make a deal" over the government shutdown; and
  • ….. also, last Saturday, Trump touted a "very good call" with Chinese President Xi Jinping, with "Big progress was being made!" toward a "comprehensive" China trade deal.
  • …..and remember, the feud between President Trump and Fed Chair Jerome Powell may still be simmering.

Other concerns rattling the market have been…..

  • …..Brexit's impact on the United Kingdom and Europe,
  • ….. as well as a slowdown in the Chinese economy,
  • …..the amount of volatility on Wall Street,
  • …..oil prices and OPEC,
  • …..dollar downturn,
  • …..monetary policy, and
  • …..effects of waning QE.

Therefore, when a 2019 stock market rally is confirmed, and the major indexes and leading stocks continue to gain ground, you need to be prepared to take advantage of this situation – and one such stock that will benefit is the Santa Clara, California based 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.

Technology touches almost every aspect of our lives and this trend is accelerating exponentially. Thanks to the advent of the cloud, this is likely to continue for decades to come. Businesses and governments are completely committed to the migration to the electronic world.

Intel is one of the suppliers to the brains of all tech. So it will have sustainable strong demand for their products and services. They have been leaders since the early days of computers.

And now, Intel stock is trying to start building the right side of a seven-month consolidation. From the June 4 peak of $57.60, shares hit $42.36 on Oct. 24. Intel stock hasn't undercut that. It's rallied for the past four sessions, closing Monday at $46.93.

About Intel Corporation…..

Intel Corporation designs, manufactures, and sells computer, networking, data storage, and communication platforms worldwide. The company operates through Client Computing Group, Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group, Programmable Solutions Group, and All Other segments.

Past Performance…..

Intel has quietly outperformed in the past two months, holding above the October low while major benchmarks have plunged to the lowest lows since the third quarter of 2017. This bullish divergence could pay off in the first quarter of 2019, with a sturdy uptick that restores the stock's mixed technical outlook while raising the odds for an advance to new highs.

Intel last released its quarterly earnings results on Thursday, October 25th. The chip maker reported $1.40 EPS for the quarter, topping the consensus estimate of $1.15 by $0.25. Intel had a return on equity of 29.64% and a net margin of 21.91%. The business had revenue of $19.16 billion during the quarter, compared to analyst estimates of $18.11 billion.

Future Earnings…..

Equities analysts expect that Intel will post $19.01 billion in sales for the current quarter. Intel reported sales of $17.05 billion during the same quarter last year, which indicates a positive year-over-year growth rate of 11.5%. The firm is scheduled to issue its next earnings report on Thursday, January 24th.

Analysts Opinions

BidaskClub upgraded Intel from a “hold” rating to a “buy” rating in a research note on Tuesday.

Several equities analysts have recently commented on the company…..

  • ValuEngine raised shares of Intel from a “sell” rating to a “hold” rating in a report on Saturday, December 13.
  • BNP Paribas set a $53.00 target price on shares of Intel and gave the company a “neutral” rating in a report on Tuesday, December 4th.
  • Morgan Stanley increased their price objective on Intel from $54.00 to $55.00 and gave the company an “equal weight” rating in a research note on Wednesday, December 19th.
  • Finally, Needham & Company LLC reiterated a “buy” rating and issued a $57.00 price objective (down from $60.00) on shares of Intel in a research note on Friday, October 26th.

Six research analysts have rated the stock with a sell rating, eighteen have issued a hold rating and eighteen have issued a buy rating to the company. Intel has a consensus rating of “Hold” and an average target price of $55.80.

Other news……

Intel declared that its Board of Directors has authorized a stock repurchase program on Thursday, November 15th that authorizes the company to buyback $15.00 billion in outstanding shares. This buyback authorization authorizes the chip maker to repurchase up to 6.8% of its stock through open market purchases. Stock buyback programs are usually a sign that the company’s management believes its stock is undervalued.

As well, CEO Robert Holmes Swan bought 5,117 shares of the stock in a transaction on Thursday, November 29th. The shares were bought at an average price of $48.30 per share, for a total transaction of $247,151.10. Following the completion of the transaction, the chief executive officer now directly owns 131,839 shares of the company’s stock, valued at approximately $6,367,823.70.

And again, CEO Robert Holmes Swan bought 5,263 shares of the business’s stock in a transaction dated Thursday, December 6th. The shares were purchased at an average price of $46.74 per share, for a total transaction of $245,992.62. Following the transaction, the chief executive officer now directly owns 137,102 shares of the company’s stock, valued at approximately $6,408,147.48.

Summary

Fundamentally, INTC is cheap as it sells at a 10 trailing 12 months price-to-earnings ratio.

Intel has a current ratio of 1.51, a quick ratio of 1.13 and a debt-to-equity ratio of 0.35. The company has a market capitalization of $218.71 billion, a PE ratio of 13.56, and a PEG ratio of 1.23 and a beta of 0.90. Intel has a 52-week low of $42.04 and a 52-week high of $57.60.






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