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Intel (INTC), whose colleagues include Advanced Micro Devices (AMD) and Texas Instruments (TXN), had a nice time during yesterday's after-hours trading. The company's stock was met with buying approval after the impressive first-quarter earnings report was posted. How should investors feel about the stock now?
Well, investors should feel pretty good, I believe. The price action has been encouraging. First, if you examine the one-year chart, you'll see that the stock has been trending higher. Admittedly, it's not the smoothest-looking uptrend, but overall, I think the chip maker is going to continue to climb higher. And the stock has certainly come a long way from the 52-week low.
Second, I liked the fact that Intel was higher going into the earnings report and higher after the bell. By the end of yesterday's regular session, shares closed up by 1%, backed by an excellent level of volume. Then, the stock climbed another 4.6% in extended trading.
It will be interesting to see how the price action shapes up during Wednesday's session. Like I say, investors shouldn't worry. Not only does the stock appear technically fine, but fundamentally, the potential for the business remains compelling. Earnings of 43 cents per share beat estimates by five pennies. Expected revenue was $9.8 billion; actual revenue was $10.3 billion. Also, the gross margin beat the analyst projections.
On a valuation basis, I don't think the stock is too expensive. I'm writing this ahead of the bell, but if Intel does get a bid today, and if you're a trader who held shares into the report, I would say that you probably should strive to be ahead of the profit-taking and sell out to capture gains. Again, though, longer-term holders should consider standing behind the current thesis.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
4-14-2010 @ 1:53PM
lpdunn said...
Intc a bellweather - has room to expand
April 14, 2010 Expanding margins are not a surprise at this stage of the cycle and are driving the stock price up. $32 target not unreasonable assuming a small premium to the market which historically happens often especially given their 20% ROE. http://www.stockvalu.com/BlogEngine/post/Intc-a-bellweather-has-room-to-expand.aspx