This time, Intel's gains should stick
If history is any guide, the chip-maker's shares will blip, then drop, after posting a great quarter. But there's no reason a stock this good should continue to trade at a discount.
By Jim Cramer, TheStreet
How could the Street be so wrong about Intel (INTC)? How did people not see the demand? How did people not recognize what a gift it was to get this one with a 3% yield?
I understand. We have had several great quarters from Intel, and they have led to blips up that then gave up the ghost almost immediately. Maybe the tech bear market knows no bounds and we are simply going to see the same thing happen again. Every time Intel reports a great quarter, everyone says it is the last good quarter and sells it. Could happen again.
But I am a believer. I do not believe that high-quality, terrific stocks with earnings momentum, great product cycles, picture-perfect balance sheets and unbelievably good managements that are delivering amazing gross margins and sales should forever trade at big discounts to the average stock.
I do not believe that tech is not a growth industry. I do not believe that it is just some industry that makes uncoated free sheet paper or commodity chemicals -- both of which, by the way, have participants of no distinction that sell as multiples north of Intel.
I think this one's a wake-up call about the power of the cyclical economy and of the secular move into smaller and better semiconductors. Right now, everything is tarred by Apple's (AAPL) success even though Intel is allied with Apple. The theme has been: If it isn't in an iPad or an iPhone, it ain't working.
I think that changes today. I will totally admit to being both right and wrong the last two times Intel reported. I said, each time, that it was not a peak quarter, and that it should be bought. Each time, it wasn't a peak quarter, but it had to be sold.
I think this time the stock won't give up the ghost. It's just too doggone cheap with too much good news to stay in the cohort of crummy stocks with crummy management, mediocre balance sheets, no yields and no future beyond hope in some cycle that isn't about to play out.
At the time of publication, Cramer was long AAPL and INTC.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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