Here’s Why to Buy Intel Corporation Stock on the Weakness

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Intel Corporation (NASDAQ: INTC ) has lost some altitude lately. But it is nowhere near the decline of some of the red-hot operators like NVIDIA Corporation (NASDAQ: NVDA ) and Advanced Micro Devices, Inc. (NASDAQ: AMD ), which have suffered double-digit declines. Note that the drop in INTC stock has been about 8% or so.

And yes, this should not be a surprise. INTC is a mature company that dominates critical markets like PCs. There is also a decent dividend yield of 2.53%. So then, perhaps INTC stock is in the buy range right now? Well, I think so. Granted, it will not likely provide huge returns.

But over time, INTC stock should be a good way for conservative investors to play the growth in the chip industry. Let's see how:

A Closer Look at INTC Stock Underpinnings

Automotive : This massive category is undergoing sweeping changes. No doubt, INTC should benefit as there will be demand for sophisticated processors and memory. But the company has been smart to pull off transformative acquisitions, such as for Mobileye.

This company, which has invested aggressively in R&D for the past 15 years, has developed sophisticated technologies for monocular vision chips, which allow for lane departure warnings, traffic sign recognition, intelligent high beam control and pedestrian detection.

Over 15 million vehicles are equipped with these systems as Mobileye has partnerships with 27 automakers, including Ford Motor Company (NYSE: F ), General Motors Company (NYSE: GM ) and BMW. It's true that INTC paid handsomely for Mobileye. But then again, it has significant global scale to accelerate the growth of the business.

Mobile : One of the biggest missed opportunities for INTC has been mobile. But the company may have a second chance. There are encouraging signs that the company is gaining traction. Just look at the heated litigation between Apple Inc. (NASDAQ: AAPL ) and Qualcomm, Inc. (NASDAQ: QCOM ).

Because of this, INTC has been getting some valuable contracts with AAPL , such as for 5G wireless broadband. According to's Chris Lau: "The partnership is a win-win for Apple and Intel. Apple wants to lessen its dependence on Qualcomm, while Intel will start making some of its revenue from the mobile market."

Partnership Power : Acquisitions are not a cure-all (hey, they can be very risky). This is why INTC has been strategic with its partnerships. A notable case is the deal with Micron Technology, Inc. (NASDAQ: MU ), which is focused on developing sophisticated memory technologies.

This will help INTC capitalize on opportunities in mobile, cloud computing and AI (Artificial Intelligence).

PCs : In the meantime, INTC has been making the investments to make sure its legacy businesses remain dominant - and yes, a nice source of cash flows. The company has the Xeon line of chips for the datacenter and then there is the Core i9, which is a six-core/12 thread system that is at the cutting edge for PC market.

Bottom Line on the INTC Stock Price

It's understandable that there is skepticism about the recent good INTC stock news. The fact is that the shares have been a big disappointment over the past decade, with an average return of 6.14% during the past decade.

But as seen with companies like Microsoft Corporation (NASDAQ: MSFT ), the turnarounds of old-tech operators can be lucrative for investors. And as for INTC, the company has been making bold moves to get things back into growth mode.

Oh, and the valuation remains at reasonable levels, with the forward price-to-earnings multiple of 13X. In fact, this makes it one of the cheapest plays on the chip sector.

Tom Taulli is the author of High-Profit IPO Strategies , All About Commodities and All About Short Selling . Follow him on Twitter at @ttaulli . As of this writing, he did not hold a position in any of the aforementioned securities.

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The post Here's Why to Buy Intel Corporation Stock on the Weakness appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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