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Intel Has Too Many Positives to Miss Earnings, Investors Hope

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Part 13
Intel Has Too Many Positives to Miss Earnings, Investors Hope PART 13 OF 13

What Is Driving Intel’s Stock to a 14-Year High of $38?

Intel’s investors optimistic about the future

In this series, we have seen that the market environment is favorable for all of Intel’s (INTC) business segments as seasonal demand picks up. There is renewed optimism among Intel’s investors over the company’s efforts to tap future growth.

Most of these efforts are unlikely to make their way into the company’s earnings before fiscal 2017, but investors are glad to see prospects of growth.

What Is Driving Intel&#8217;s Stock to a 14-Year High of $38?

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Intel’s stock less volatile than peers

In fiscal 3Q16, Intel’s (INTC) stock price rose 10% and is currently trading at a 14-year high of $38. It outperformed the S&P 500 Index, which rose 2.9%. However, Intel underperformed its peers Advanced Micro Devices (AMD) and Qualcomm (QCOM), which rose 35% and 27%, respectively.

Intel’s diverse product portfolio diversifies risks and makes it less volatile than its peers that have a presence in a few markets. This is visible from Intel’s beta, which is ~1.1, while the beta for AMD and Qualcomm are ~2.4 and 1.5, respectively. Beta is a measure of volatility, with more than one entity being highly volatile.

Analysts’ price target

Over the past few months, analysts have raised their consensus price targets for Intel stock from $35.58 in July 2016, to $37.61 in August 2016, to $38.06 in September 2016, and to $40.27 in October 2016.

Intel’s (INTC) stock has met all price targets through September, and it may also meet the October price target if it reports strong fiscal 3Q16 earnings and guidance.

Institutional buying and selling

According to the company’s 13F SEC filing, several institutions increased their positions in Intel in fiscal 4Q15, and several institutions reduced their positions in Intel in fiscal 2Q16. However, institutional buying and selling were low in fiscal 3Q16, as most investors are holding their positions over the anticipation of growth.

At a time when institutional buying and selling was low, Intel’s stock rose to a new high. You can get broad-based exposure to Intel and its peers by investing in the VanEck Vectors Semiconductor ETF (SMH). SMH has holdings in 26 semiconductor stocks, including ~15.7% in INTC and ~9.1% in QCOM.

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