Intel (INTC -1.13%) stock has been an underperformer of late, but the company has a new initiative that is exciting some investors. In this episode of "The 5," recorded on Oct. 21, Jason Hall explains why he's buying shares of Intel.

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Jason Hall: I'm going to go with another kind of legacy company that's a big player in its space. This one is very much a turnaround story, but that's Intel, ticker INTC. There's a couple of reasons that I've gotten really, really interested in Intel and I bought a position actually on Oct. 1. The semiconductor industry is hugely important as if you've tried to buy anything that either has a battery or plugs into the wall for electricity, there is no more industry, it's like the central point of failure for the entire global supply chain right now. It's so important. The proliferation of semiconductors is continuing. They're becoming more complex, they're needed in more and more things, they need to be more secure, they need to be more reliable, they need to be faster. Here's the crazy thing about it. Intel stock is still down while the rest of the industry is up an enormous amount. Intel shares still are down.

Right now there is still down about 19% from the all-time high which was reached in like early or late 2018. Not for no reason, because at the end of the day Intel has some very real challenges. Intel is this fully vertically integrated company from design, manufacturing, fabrication like soup-to-nuts, they're one that does everything. If you look at what everybody else is trying to do, it's moved to the semiconductor companies are fabless, where they do the design and then they work with these large contract manufacturers like Taiwan Semi or Samsung mainly that do the manufacturing. They're the foundries that do the manufacturing and that means that Intel is losing a lot of customers. Apple is a great example. This is a company that's just completely gone away from Intel, and the good thing is that management at Intel has figured this out. You've got Pat Gelsinger the CEO who's in right now, who is clearly made it a mission and there is a real strategy in place, and there's a separate business unit with a leader that reports directly to the CEO that the entire mission is to build a contract manufacturing business. To work with other companies that can use, and design, and build on that x86 architecture. To build chips that they want, to do their things, and that is gigantic.

It means that right now at this phase, I think Intel is such an under-appreciated turnaround opportunity because, by the way, guess what guys? It's still a really profitable company that generates really good cash flows. That has a pretty strong balance sheet, and it's in position to spend tens of billions of dollars to add new capacity. As it makes this transition and builds this new contract manufacturing business, it can take its existing vertically integrated business. It's still really important. There's still billions and billions of dollars that are going to be spent to buy chips that Intel designs because there's lots of companies that don't want to have any involvement with designing chips, and they want to buy something off the shelf and it's going to work in their application. I think Intel is getting really, really overlooked. I think the next 10 years, Intel's absolutely going to outperform the S&P 500. It's going to take three or four years to turn this business around. Right now you can buy it and the expectations are still so low, the potential I think that's there is not priced in. I think it's a value and I think it's a great turnaround play, and that's why I bought Intel and I would encourage anybody else to think about it too.

Travis Hoium: This turnaround stories in technology happen over and over again. Apple was a turnaround story, Microsoft was really in trouble until they decided to go all in on the cloud. It seems to happen in technology over and over again where a company builds a huge business, they miss the next phase where they're out-competed by somebody else, and then they have to completely rethink their business model. But then that puts them in a solid position to win in the following phase. I think that's the bull case for Intel and I like that pick.

Hall: By the way they just reported earnings about an hour ago. Revenue up five percent year-over-year. Raising full-year earnings and margins guidance. This is a solid business and it's a profitable business.