It's the best opportunity to buy this
stock since the start of 2012.
I've told you about
several times. Put simply, these are the stocks I think you can
buy, hold,profit from and basically forget about -- all without
losing any sleep at night.
These companies enjoy huge (and lasting) advantages over their
competition... pay their investors increasing dividends... and buy
back massive amounts of their own stocks.
As you would expect, the opportunity to pick up "Forever" stocks
at dirt-cheap prices is rare.
But it does happen. And that's exactly what's happening
Is Intel a "Forever" stock? Absolutely.
It's the world's largest semiconductor maker. It owns 80% of a
$30 billionmarket , according to Morningstar.
Intel's business throws off enormous amounts of cash, and
management is putting that money in shareholders' pockets.
That's why dividends per share have increased 99% in the past
five years... and are up 42% in just the past two.
During 2011 alone, Intel bought back 468 million shares worth
$10 billion. And looking ahead, management has allocated another
$7.5 billion to future buybacks.
But all of this says nothing about the opportunity I'm seeing to
buy the shares right now.
You see, even with "Forever" stocks, no investment always goes
up. In fact, late last week Intel cut its revenue guidance for the
quarter from roughly $14 billion to a little over $13 billion.
Investors dumped the shares.
Going back even further, Intel's share price has dropped almost
15% in the past month. The stock now trades at its lowest level
since the beginning of 2012... despite dominating its market...
jacking up dividends... and buying back billions of dollars worth
Although the shares have fallen, I see a company that continues
to dominate over the long term...
Consider that in the past year, Intel has generated $54.5
billion in revenue -- 17% more than in 2010, and 56% more than in
Yet despite Intel's steady revenue growth, the stock actually
trades below where it traded five years ago.
Thanks to the recent sell-off, Intel's shares now trade at an
unbelievably low valuation.Earnings are projected at $2.38 per
share this year. That gives Intel a price-to-earnings (P/E ) ratio
of just 10. For comparison, the average P/E for the S&P is
Intel's lowered guidance and recent downturn is a perfect
example of what causes most investors to lose money in the market.
The financial press jumps on short-term stories like this. When
Intel announced its lowered guidance, dozens of articles reported
the same news, using phrases like "slashes outlook" and other scary
terms that can cause investors to question their holdings.
And for too many investors, the instant a stock falls, they want
to know if they should sell. It doesn't matter if the underlying
company still has a bright future or not (in this case, Intel
certainly does). It doesn't matter if the company is returning
billions of dollars to shareholders each year via dividends and
share buybacks (in this case, Intel continues to reward its
shareholders). Instead, the fear of losing money is simply too much
for most small investors to stomach.
I'm convinced this is why most investors lose money in the
Investors driven by fear and short-term market moves are the
ones who sell when the market falls... and buy when the market is
rising. This is a perfect recipe for losing money.
I'd love for every stock I buy to steadily rise.
But I've been investing for 20 years, and during that time span
I've never seen a stock rise consistently day-in and day-out. Every
stock experiences short-term downturns -- even the market's biggest
Take a look at
. Those who panicked and sold the stock when it tumbled in 2001 and
2008 have missed out on one of the biggest corporate success
stories of the decade...
Meanwhile, those who didn't panic -- but instead held the shares
when the stock pulled back -- have been rewarded with 2,500% gains
over the past 12 years.
The truth is, sell-offs like the one Intel has experienced in
recent weeks are opportunities to pick up shares of great stocks at
bargain prices you wouldn't see otherwise. That's how I want you to
view the market.
And right now, the opportunity in Intel is the best of the
-- Paul Tracy
[Note: Intel is a member of an elite group of investments I like
to call "Forever" stocks. These companies enjoy huge advantages
over their competition... pay their investors increasing
dividends... and buy back massive amounts of their own shares. So
far, I've only found 10 stocks that make the grade. If you'd like
to learn about the rest of my "Forever" stocks -- including several
names and ticker symbols -- follow this link.]
Paul Tracy owns shares of INTC.StreetAuthority LLC owns shares
of INTC in one or more if its "real money" portfolios.
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