How Intel Can Beat the Market in 2014

New products are key to Intel's stock this year, but so is the market's sentiment -- and that's finally starting to improve.

Jun 3, 2014 at 3:30PM

After going nowhere for the last decade, Intel (NASDAQ:INTC) is finally beating the Dow Jones Industrial Average (DJINDICES:^DJI) in 2014 on the back of a projected turnaround. Today it took another step in that direction, bringing 14-nanometer chips closer to reality.

It doesn't hurt that the Dow is only up 2% for the year, and that there's been a broad rotation from high-growth, high-risk stocks that did well a year ago to low P/E stocks such as Intel.

INTC Chart

INTC data by YCharts.

Why Intel beat the Dow today
Intel rolled out what it's calling the Devil's Canyon processor, a quad-core processor in which each core can run 4 GHz, the first chip that fast. The chip can be used with existing motherboards, so it's really just a boost from existing products.  

The bigger revolution comes with Intel's new 14nm system on a chip. The first 14nm fanless mobile chip for 2-in-1s was announced today and will be available later this year. Foxconn even showed off 10 Intel-powered tablets that are available either now or in the future.  

As tablets, smartphones, and wearable devices become more prevalent and connected, Intel has had to adjust by integrating more capabilities on each chip. It was playing catch-up to the competition in this effort, but the 14nm designs are a technology leap forward and will allow for smaller, faster, and more energy-efficient devices. Intel product announcements are starting to pick up, and that should accelerate further as the 14nm platform rolls out.

All of these products are incremental improvements in Intel's position in the marketplace. With the PC slowly dying, Intel is trying to move into tablets and other devices with new chip designs. If it can, investors are primed to profit.

Intel is generating about $20 billion per year from operations and roughly $9 billion in free cash flow. This is for a company worth just $137 billion, so if new products lead to growth the company's value could easily double.

INTC Free Cash Flow (TTM) Chart

INTC Free Cash Flow (TTM) data by YCharts.

Intel isn't a quick hitter for investors, but I think the company is on the right track with a management team that has taken a long-term approach to developing its mobile solutions. While the industry was recovering from the financial crisis, Intel was investing in 14nm technology. That's where it could pull ahead of competitors; new product announcements are a step in that direction.

Maybe 2014 is finally the year Intel becomes a market-beating stock once again.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Travis Hoium manages an account that owns shares of Intel. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers