Why Intel Corporation Shares Might Pull Back

Does this analyst make a good case? Or is it just more noise from Wall Street?

Apr 16, 2014 at 1:41PM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Intel Corporation (NASDAQ:INTC) traded sluggishly on Wednesday after the chip gorilla posted in-line Q2 results and received a buy-to-neutral downgrade from B. Riley & Co.

So what: Along with the downgrade, B. Riley planted a price target of $29 on the stock, representing just 8% worth of upside to yesterday's close. While momentum traders might be attracted to Intel's price strength in recent weeks, B. Riley's call could reflect a growing sense on Wall Street that its valuation is becoming a bit stretched.

Now what: According to B. Riley, Intel's risk/reward trade-off is pretty balanced at this point. B. Riley said in reference to Intel's Q2:

Revenues were slightly below/in-line with the Street's $12.76B/$13.00B but the mid-yr ramp to 63% [gross margin] was a pleasant surprise. However, from there 2H14 tablet margin mix pressures GM 100-200 bps/qtr to leave OM flattish from 2Q14-4Q14 despite falling opex. ... For the stock -- which we upgraded to 'Buy' in mid-October expecting PC stability to ultimately price in, we believe this sets up a tough 2H14 catalyst profile at a time when PCG's qq growth risks escalate.

Of course, when you couple Intel's structural advantages with its juicy 3.5% dividend yield, those short-term concerns might be providing patient Fools with a solid long-term income opportunity.

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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