• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

Here's Why I Focus on Mighty Intel's Earnings

I really can not imagine my largest portfolio not having Intel as one of it's anchors.
By STEPHEN GUILFOYLE
Jan 24, 2019 | 11:02 AM EST
Stocks quotes in this article: AA, ARNC, JPM, INTC, AAPL, AMD, GOOGL, AMZN, AVGO, UTX

Perhaps You Don't Understand

Four times a year, during the mental break that comes in between earnings seasons, everyone looks forward to the lead-off hitters. Ever since Alcoa (AA) split from Arconic (ARNC) , the big banks have hit at the top of the order. While the fortunes of the banks certainly matter to me, as I almost always have some kind of position in JP Morgan (JPM) at a minimum, I always make a mental note of where Intel (INTC) is on the calendar. Why is that? They may not be the fanciest. They may not be a growth name. All they are is gigantic, and run with quarterly revenues that dwarf the rest of the space.

So why focus on Intel? Simply because this may be the best read in one place that an investor can make into the health of the semiconductor industry as a whole. Why the semis? That's easy. Chip stock performance underscores the health of almost everything else. If chip stocks are cold, business spending itself is cold. In fact, if chip stocks are cold, the consumer, him or herself, is probably cold as well. Just ask Apple (AAPL) .

For traders, while there are times when Intel will ramp up into, or descend into, a new trading range, the stock almost always stabilizes in a multi-months long pattern, while paying a consistent dividend. That's really all that a risk manager can ask of an equity, and I really can not imagine my largest portfolio not having this stock as one of it's anchors. If you still haven't figured it out, Intel reports tonight.

Philip Pirrip

The final bell will peal this afternoon at 4 pm ET. The Mighty Intel will drag the lumber to the plate. The crowd will hush. The hurler will deal. Are expectations that great? Let's take a peak. Wall Street seems to be looking for Q4 EPS of $1.22 on revenue of more than $19 billion. If realized, these numbers point to earnings growth of 13% on sales growth of more than 11%. So, yes, Matthew Pocket, I would say that expectations are well above market norms. Traders may want to make note that Intel has beaten earnings consensus view in each and every quarter since Q3 2015.

There's More

Under interim CEO Robert Swan's guidance, the firm has been innovative in terms of product development. I have been a public advocate for the firm's retention of Swan in that position on a permanent basis. Just one caveat. Swan is on the record stating that he has no interest in the job, despite the firm's better than expected performance since taking on the role.

Does Intel announce a permanent CEO tonight? I think, depending on who it is, the stock may react one way or the other regardless of performance. While I think the shares would pop if Swan were to change his mind upon being offered the job, there are other individuals of interest. Personally, I like Lisa Su, CEO of Advanced Micro Devices (AMD) , though I do not see that hire very likely.

Given that those two are not options, I think markets would openly receive one other possible player. That would be long time Intel veteran Diane Bryant. Bryant ran the data center business at Intel prior to leaving in 2017 to join Alphabet (GOOGL) as COO of that firm's cloud business. Bryant worked closely at Intel with Amazon (AMZN) as that firm built out the AWS business. Bryant left the Google Cloud this past July. As far as I can tell she is sits on the boards of both Broadcom (AVGO) and United Technologies (UTX) . Gonna wait for a better candidate? May be a while.

Intel 

Target Price (Trade): $52

Target Price (Investment): $56

Add: $44

Panic: $42

Add-Ons (minimal lots)

Long 100 shares of this name? There are ways to manipulate net basis downward. Consider these choices.

- Sell one INTC July $44 put (implied value: $1.74)

- Sell one INTC July $55 call (implied value: $1.77)

The retail trader can knock an aggregate $3.51 off of net basis this way. The catch is that depending on where the equity trades in six months, the trader may have to double up at the $42 level, or may be committed to taking a profit at $55. Over those six months, this trader will likely be paid a quarterly dividend (30 cents) twice, thus reducing net basis by a now $4.11 after all considerations. That's an 8.2% head start. Rock on.

(JP Morgan, Apple, Alphabet, and Amazon are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells JPM, AAPL, GOOGL or AMZN? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Stephen Guilfoyle was Long JPM, INTC, AAPL, AMZN equity.

TAGS: Earnings | Investing | Markets | Options | Stocks | Trading | Semiconductors & Semiconductor Equipment | Stock of the Day

More from Investing

Take a Fresh Look at Where You Put Your Cash

Peter Tchir
Mar 27, 2023 12:40 PM EDT

Let's get back to the basics of cash reallocation and see why I'm not freaking out, but I'm also not in a mood for risk.

Let's 'Triangulate' Costco's Breakout Potential

Bruce Kamich
Mar 27, 2023 12:14 PM EDT

Shares of them membership have outlined a really large triangle formation. Here's which way the stock is leaning.

Why Market Indexes Are Often a Poor Measure of What's Really Going On

James "Rev Shark" DePorre
Mar 27, 2023 11:55 AM EDT

We are witnessing one of the most extreme disconnects in decades between the Nasdaq 100 and Russell 2000.

What the Fed Has Wrought

Bret Jensen
Mar 27, 2023 11:00 AM EDT

Damage From the central bank's policy mistakes are likely to keep growing.

Movado Shows Now Isn't the Time to Issue Disappointing Guidance

Jonathan Heller
Mar 27, 2023 10:35 AM EDT

The watchmaker saw its shares hammered on its outlook, which is a cautionary tale for other stocks.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 01:56 PM EDT PETER TCHIR

    Very Cautious

    I am very cautious here. I don't like how the c...
  • 08:58 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How to Adjust Your Trading Style as Market Conditi...
  • 05:00 PM EDT CHRIS VERSACE

    AAP Podcast on the Fed Decision!

    Listen here!
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login