Some financial commentators have compared the current valuation of the tech-centric Nasdaq 100 with the dizzying heights of the early-2000’s dot-com bubble. With that assessment, some folks tend to lump Intel (NASDAQ:INTC) in with other tech firms and therefore assume that Intel stock must be overpriced.
Pigeonholing companies and making sector-based assumptions isn’t a wise thing for investors to do. Granted, an argument could be made that the so-called FAANG stocks are richly valued.
However, Intel stock isn’t a FAANG stock and shouldn’t be held responsible for the Nasdaq’s lofty valuation. We’ll take a closer look at the data surrounding Intel shares and you can decide for yourself whether they’re in bubble territory.
Additionally, there have been some encouraging developments at Intel which should drive home Intel stock’s value proposition even further.
A Closer Look at Intel Stock
So, here’s where the rubber meets the road. Intel stock features a surprisingly low trailing 12-month price-to-earnings ratio of 9.18.
Many years ago, my father taught me that a P/E ratio below 10 signifies a good value. All these years later, it’s difficult to find any respectable large-capitalization stock with a P/E ratio under 10, not to mention a famous chipmaker’s stock that’s trading so cheaply.
But that’s what’s makes trading so much fun. In almost any situation, you can find hidden pockets of value if you search long and hard enough. In a time when FAANG stocks have given the tech sector a bad reputation among value seekers, Intel stock bucks the trend.
And by the way, Intel stock offers a forward annual dividend yield of 2.69%. There are FAANG stocks that offer no dividend at all. Did you ever imagine that Intel shares could be so appealing to value and income investors? Life is full of surprises!
Hooray for Huawei?
Speaking of surprises, Intel recently disclosed that the company is now able to sell its semiconductors to a highly significant client.
To be more specific, Intel affirmed that it is able to sell microchips to Chinese tech giant Huawei again. This is a major coup for Intel due to the sheer size and global market footprint of Huawei.
Keep in mind that U.S.-imposed restrictions went into effect on Sept. 15. Those restrictions generally prevent the sales of U.S.-sourced components to Huawei.
Yet, evidently Intel has managed to secure an exemption for at least some of its products. Surely this saga will continue to unfold in the coming months. For the time being, however, we can score a big win for Intel in the global chip wars.
Pushing the Envelope
Further enhancing Intel’s value proposition is its focus on state-of-the-art automotive-tech innovations. In this vein, Intel recently announced that its Mobileye division will provide essential technology in the area of driver assistance for the Zero Concept, an electric vehicle manufactured by Chinese automaker Lynk & Co.
Moreover, Mobileye will provide vision-sensing technology to a number of vehicle makes and models manufactured by Geely Auto Group (OTCMKTS:GELYF).
Intel Senior Vice President Amnon Shashua provides further details on this game-changing automotive technology:
“We are thrilled to help Geely offer Lynk & Co drivers an exciting and advanced package of high-level driver aids and safety features, including point-to-point highway pilot and traffic-jam assist, all powered by Mobileye’s SuperVision surround-view driver-assistance system and kept current with OTA updates.”
Clearly, Mobileye’s technology has the potential to make driving a safer experience. And for Intel stock holders, it’s refreshing to know that the company continues to push the boundaries.
The Bottom Line
Perhaps it’s time for investors to separate Intel stock from the group of tech stocks are are overpriced. Just because Intel is a tech innovator doesn’t mean that its shares have to be expensive.
And in reality, Intel stock should appeal to value seekers, dividend collectors and innovative tech enthusiasts.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
