Today I opened a position in Intel (INTC) the largest supplier of processor chips for the computer industry among other things. The company is currently rated as a hold by the majority of analysts, though it has 4/5 stars from S&P. One of the important things to keep in mind about analyst ratings is that what often propels a stock upward is analyst upgrades; if a stock is rated as a buy by all analysts covering it, there isn't anywhere for them to go but down. This is why it is important to not only look to such ratings for help choosing a stock, but also create your own "analyst report" based on the information that the different reports give you. As is noted in many investing blogs/books/shows you must always do your own "homework," on the stock and not just trust that others are correct. My take on Intel is that it still essentially commands a monopoly for processors for all intents and purposes. Due to the faltering economy, consumers have moved toward cheaper computers, which tend to source chips from AMD. However, as the economy rebounds, it is likely that demand will switch back to more expensive Intel-based computers. Intel also provides chips to Apple computers now, and due to the sharp decrease in Apple laptop prices, any shift of demand to Mac laptops will at the worst keep the money in Intel as opposed to another semiconductor company. Lastly, at the cost averaged price of 15.84 (if Intel is not ITM at expiration) would result in a 3.5% yield which is pretty high for a tech company. Due to all these factors, and the fact that Intel has recently broken out of the $15-16 range, makes this a good buy. The performance metrics are below:
6/10/2009 -- Bought 100 INTC @ 16.28
6/10/2009 -- Sold To Open 1 INTC July $17 Call @ 0.44
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1584.00
Downside Coverage: 2.7%
Possible Max Upside: 7.32%
Annualized Max Upside: 70.34%
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