Dilok Klaisataporn I am upgrading my outlook for Intel ( NASDAQ: INTC ) to Buy , after suggesting a Hold to Avoid rating for a number of years. My May 2022 article here summed up the "value trap" problem plaguing the stock. Following form, the share quote has gone nowhere to down the last 24 months.
Seeking Alpha - Paul Franke, Intel Article, May 31st, 2022 Yet, after several years of heavy investment into new plant & equipment, Intel's reimagined focus on becoming a leading foundry fabricator for the whole semiconductor industry in North America has essentially been ignored by Wall Street. Sure, excessive levels of capital spending have slashed earnings and free cash flow generation upfront. But, this business investment spree could pay off in a major way over the next couple of years for shareholders.
At this juncture, Intel's cheap valuation vs. similar Big Tech semiconductor names appears to be an exercise in trailing frustration, not one anticipating a bullish upturn in operating results. As measured by the top line and important price to sales ratio against semiconductor competitors and peers, Intel's dislike by investors has reached extreme proportions in the summer of 2024.
Using this yardstick, Intel is selling for a whopping 78% discount to the industry median average today (2.4x vs. 11x)! YCharts - Intel vs.
Largest Semiconductor Names, Price to Trailing Sales, 2 Years My bottom line...
when I cross the ideas of rising future earnings with an insanely low valuation.
