The Inside Value newsletter recommendation has its share of bulls and bears, and there's no better place to see that in action than in our own Motley Fool CAPS community. I turned there to see whether I could get a good read from both camps on why Intel is trading for less than it did five years ago.
Powered by Intel
As one of the most rated stocks on CAPS, Intel has plenty of followers around Fooldom. Let's check in with what some of them have been saying in their CAPS pitches.
TheDrake2 -- 9/14/06
Intel's latest desktop (Core 2 Duo) dominates AMD
(NYSE:AMD)at every level, so much so that AMD had to drop average selling prices tremendously. I am confident that this turnaround will be highly profitable from the $20 level. Full disclosure, I am an AMD fan boy.... or at least I was. If Intel can get around the FSB limitation on the server side, and scale well, they can drop the Itanic completely.
A great company that tried to do too much. I still look for Intel when I go computer shopping, just not TV shopping, egg shopping, cell phone shopping, and everything else they tried to do. Now that they are trimming the fat and getting back to basics I expect to see great things from this innovative company.
I'm pretty much thinking that this is the best value for this Rule Maker in a decade. Like some of the other 90s high flyers, Intel is becoming a value investor's company. I'm willing to take a chance here and see if the new products work out. Having been an investor over a long period of time, this looks like a bargain and a new cycle instigated by Vista should unlock some of the value.
Intel made it to market ahead of the seasonally strong fourth quarter with a barrage of new chips, targeting both consumer and business. It was a long wait, but Intel's offerings are now technologically superior to those of AMD in raw performance and performance-per-watt. Intel's offering also closely corresponds with the planned launch of Microsoft's
(NASDAQ:MSFT)Vista. The last time a major release of Windows and Intel chips coincided, this marked the beginning of major new sales cycle for the duopoly and IT spending in general.
ModernMarxist -- 9/15/06
I am very bullish on the X86 PC market. As a way to capture the greatest profit from this growth, I have a binary play with INTC/AMD. I simply buy some of the cheapest of the two, and sell occasionally to rebalance the two. There is a great amount of uncertainty in how market share between the two will pan out in the next few years. This provides wild volatility, allowing one to buy on frequent dips in share price, and sell at ridiculous highs.
My goal between the two is to accumulate shares of both companies. I see a Nash Duopoly in the making. If it pans out that way, I should be set to reap great profits. Nash Duopolies do not normally enter price wars, but instead generally tend to maximize profits for both companies.
Buying AMD at low valuations provides the opportunity for insane growth. Buying Intel at low valuations provides a hedge against AMD's possible failure, which should also be insanely profitable if it does succeed in turning AMD back into an "Also-Ran".
The devil is in buying both at low valuations, which both companies are providing at the moment.
Naturally, not everyone is head-over-heels in love with Intel. Even though just 189 of the 1,439 investors who have an opinion on the company in CAPS feel that the shares will underperform the market, they can get pretty vocal about laying their bearish chips on the table when it comes to dismissing the "Intel Inside" company.
Let's see what some of your more pessimistic fellow investors had to say about Intel on CAPS:
TheWho44 -- 9/22/06
This will still drop further. Long term I think it can grow and provide excellent dividend growth potential but there is no excess of demand for this stock in the short term and I don't foresee any news forthcoming in the near future to change that.
Intel continues to see increased competition from AMD in the short term, and as Operating Systems become more mature across all devices, I believe the choice of chip is going to come down to price and performance -- neither of which Intel has a compelling lead in. The days of "Intel Inside" actually meaning anything are long gone.
ID1OTSAVANT -- 9/15/06
Things are not going back to the way they were. HP and DELL in a vicious dogfight, will play AMD against Intel. Intel has massive overcapacity, and is still in denial. Huge inventory overhang is being ignored. SEC will be on the company's case, and CEO Otellini will be out the door, or on the way out, within a year. Maybe it's a buy after all that.
Long term Intel and AMD are engaged in a race to the bottom. They both hurt each other rather than win outright victories. I think that competition is increasing as mobile phones, PDAs, etc. improve. The Internet will still be a huge driver but I am not sure that PCs will continue to benefit from it. Plus as chip geometries decrease the capital expenditures required for fab increases. I think it will be hard to keep return on capital stable let alone grow it. Vista will probably create a pop, long-term though I wouldn't like to own this stock.
Increased competition from AMD means price competition and declining margins. Inventory glut in PC world means sales under pressure. Inefficiently run company, need greater job cuts. Overrated management.
I know where I stand. I usually couldn't care less whether I'm working on an AMD or an Intel microprocessor. However, I recently had to buy a pair of HPs, and I went with Intel versions. I guess those silly Core Duo commercials made an impact on me (more than those silly spots a few years ago with the folks in bunny suits).
Even though I have to admire the kind of battle that AMD has been able to put up with a fraction of Intel's cash arsenal, I just don't see Intel fading away anytime soon. It's not as though one or the other has to, anyway. A new wave of Microsoft software should help the entire industry, and I don't know whether I would want to be standing in the way of that kind of favorable current next year.
Motley Fool CAPS is a new community-driven experience where individual investors pool their knowledge to seek out superior stock ideas. Are you up for the challenge? Go ahead and give it a shot .
Longtime Fool contributor Rick Munarriz is currently ranking 8,507 out of the 13,231 active CAPS players. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy .