Intel Stock Climbed 11% In A Week. How Confident Are You In The Stock?

Intel (INTC) stock is up 10.8% in 5 trading days. Already own the stock? Might want to consider booking some profit as there is risk – specific to growth, profitability and downturn resilience. Consider the following data:

• Size: Intel is a $162 Bil company with $53 Bil in revenue currently trading at $37.17.
• Fundamentals: Last 12 month revenue growth of -3.7% and operating margin of -8.3%.
• Liquidity: Has Debt to Equity ratio of 0.31 and Cash to Assets ratio of 0.11
• Valuation: Intel stock is currently trading at P/E multiple of -7.9 and P/EBIT multiple of -15.0
• Has returned (median) -0.2% within a year following sharp dips since 2010. See INTC Dip Buy Analysis.

While we like to ride the momentum if the fundamentals check out – for INTC, see Buy or Sell INTC Stock – we are wary of bull traps. Specifically, it is worth trying to answer if things get really bad, and INTC drops 20-30% to $26 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

INTC stock has jumped meaningfully recently and we currently find it unattractive. This may feel like a caution, and there is significant risk in relying on a single stock. However, there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Below are the details, but before that, as a quick background: INTC provides design, manufacture, and sale of computer products and technologies, with AI-driven drug search advancements through a strategic partnership with MILA.

2022 Inflation Shock

• INTC stock fell 63.3% from a high of $68.26 on 9 April 2021 to $25.04 on 11 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $50.76 on 27 December 2023 , and currently trades at $37.17

 
2020 Covid Pandemic

• INTC stock fell 34.8% from a high of $68.47 on 24 January 2020 to $44.61 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high

 
2018 Correction

• INTC stock fell 26.1% from a high of $58.82 on 22 April 2019 to $43.46 on 3 June 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 26 November 2019

 
2008 Global Financial Crisis

• INTC stock fell 56.8% from a high of $27.98 on 6 December 2007 to $12.08 on 23 February 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 26 March 2012

 
Worried that INTC could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.