Please ensure Javascript is enabled for purposes of website accessibility

The 1 Stock I'd Buy Right Now

By Tim Brugger - Oct 11, 2017 at 9:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As a value-oriented investor with a long-term outlook, one stock jumps out as a strong buy for a host of reasons.

Discussions involving the PC market usually include an underlying theme of "the sky is falling." However, more and more pundits are coming to the realization that PCs aren't dead -- in fact, the market is actually stabilizing. That's good news for a number of stocks, but one in particular will really benefit: Intel (INTC -2.86%).

Until recently Intel was a nearly forgotten player: Its early stage Internet of Things (IoT), cloud-based data centers, and memory solutions initiatives weren't growing enough to overcome the "inevitable" decline in PC sales, or so the theory went. The result is Intel is an outstanding stock to buy right now for both value and income investors.

Room with Intel logo on wall and chairs with neon light trim.

Image source: Intel.

Better late than never

With its stock up just 9% year-to-date, it may seem as though Intel has slipped under most investors' radar -- which it had until recently. Intel is up 17% in the last three months as folks finally recognize it represents an enormous opportunity, both now and long into the future.

The beauty of Intel for value investors is that despite the recent good tidings and the fact its share price is bumping up against 52-week highs, it remains one of the best bargains in the tech industry. Trading at a mere 13 times future earnings, Intel and its 2.75% dividend yield are valued at nearly half its peer average of 24.6 times earnings today.

After a slight hiccup the first quarter of this year -- Intel still reported a record $14.8 billion in total revenue, though several of its units under-performed -- its second quarter proved it's back on track.

Good and getting better

Revenue climbed 14% last quarter to another record-breaking $14.8 billion, and virtually all of Intel's divisions handily outperformed its so-so start to the year. The client computing group, home to Intel's PC sales, jumped 12% to $8.2 billion, twice the growth rate of the first quarter.

Intel's second-largest division, data centers, posted a solid 9% growth rate last quarter with $4.4 billion in revenue, IoT rose 26% to $720 million, and the unsung but rapidly growing memory solutions unit soared 58% to $874 million.

In addition to CEO Brian Krzanich's "data center first" initiative, along with IoT and other cutting-edge opportunities, shaving overhead is another objective of Intel's. Last quarter Intel pared nearly $1.4 billion in operating expenses compared to a year ago, an impressive 21% decline. Rising sales and shrinking expenses? That's a nice combination, to say the least.

The future is now

NVIDIA (NVDA -4.20%) is another chip behemoth recording record revenue, as it did last quarter with a 56% jump in sales to $2.23 billion. One of the driving forces behind its stellar quarter was the more-than-two-and-a-half-times increase in data center sales, Intel's bread and butter and a key reason NVIDIA stock has sky-rocketed 72% in 2017.

Not to be outdone, Intel recently replaced NVIDIA in another critical area: automotive technology. Tesla (TSLA 1.24%) ousted NVIDIA as a supplier of components for its megainfotainment systems, opting instead for, you guessed it, Intel. And automotive IoT isn't the only burgeoning market Intel is targeting.

Along with a couple of networking giants, Intel's 5G mobile platform was the basis for the recently unveiled first public high-speed network in Europe. Virtual reality (VR) represents yet another outstanding growth opportunity, and Intel thinks it may have found just the thing to jump-start the fledgling market: Wireless VR.

Intel's VR technology gives gamers and other VR aficionados the capability to have an immersive experience without being tethered to a PC. Will the new "WIGig" technology finally kick the VR market into gear? Intel thinks so, and it's another example of the many growth opportunities at its finger tips, in addition to PCs, data centers, and memory solutions -- all reasons why Intel is a stock I'd buy right now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
$36.34 (-2.86%) $-1.07
NVIDIA Corporation Stock Quote
NVIDIA Corporation
$145.23 (-4.20%) $-6.36
Tesla, Inc. Stock Quote
Tesla, Inc.
$681.79 (1.24%) $8.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.