Microprocessor manufacturer Intel (NASDAQ:INTC) is roundly disliked on Wall Street. This might scare some traders away from INTC stock, but I invite you to consider a contrarian position. Besides, a couple of corporate insiders are buying up shares, and that’s a sign of confidence in the company.
Do you consider yourself a follower or an independent thinker? It’s not easy, psychologically speaking, to zig when others zag. Since analysts don’t see a prosperous future for Intel, selling is a natural instinct for many investors.
On the other hand, Benjamin Graham and Warren Buffett profited handsomely over the years by buying when “there’s blood in the streets.” If you can control your emotions and see Intel’s true value proposition, you’ll surely agree that now is the time to buy, not sell.
What’s Happening With INTC Stock?
Oct. 27 provided a textbook example of what can happen when practically everyone’s on one side of the proverbial boat. Many traders had positioned themselves for Intel to post disastrous third-quarter 2022 earnings stats. Since the actual results weren’t so bad, INTC stock rallied 10%.
Even with that price bump, the shares still trade at a deep discount compared to their 52-week high of $56.28. Moreover, Intel’s trailing 12-month price-to-earnings ratio is quite reasonable at 9.08x.
It’s also worth noting that Intel pays a generous forward annual dividend yield of 4.92%. Despite that benefit, a number of experts on Wall Street don’t recommend buying INTC stock.
HSBC analyst Frank Lee, for example, gave Intel a “reduce” rating (which is similar to “sell”) and a harsh $23 price target. Lee observed that Intel has lost market share in microchips for personal computers and central processing units.
Intel Has a Plan to Slim Down
However, the market-share-slippage issue isn’t a secret among investors. It’s already priced into INTC stock; that’s how it got so cheap.
J.P. Morgan analyst Harlan Sur also cited Intel’s market share loss and gave Intel an “underweight” (also similar to “sell”) rating along with a more reasonable $32 price target. Meanwhile, Cowen analyst Matthew Ramsay raised concerns about Intel’s data-center market share loss and assigned the shares a tepid “market perform” rating and a $31 price target.
On the other hand, Intel isn’t just sitting around and allowing its competitors to take over the industry. The company is trimming its workforce as part of a plan to create $3 billion worth of cost reductions next year.
And, even while some analysts are bearish or neutral at best on Intel, a couple of insiders are putting their money where their mouths are. Specifically, CEO Pat Gelsinger held 8,830 shares of Intel, and Director Lip-Bu Tan reportedly owned 100,500 shares after recent purchases.
What You Can Do Now
It certainly seems like Wall Street has already priced Intel’s loss of market share into the stock. Now, there’s a bargain that some corporate insiders seem to recognize, even if the analyst community doesn’t.
So, bona fide contrarians have an opportunity that might not last much longer. INTC stock is trading at a low valuation, and the company offers a healthy dividend yield. If you’re prepared to swim against the tide, there’s no need to wait — feel free to pick up some Intel shares today.
Originally published on InvestorPlace.com
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.