Monday December 25, 2006
Intel Corp. (INTC) is a favorite conservative idea for 2007 from Chuck Carlson, editor of The DRIP Investor, and author of Winning with the Dow's Losers. Here's a look at the chip maker.
"Intel Corp. (INTC NASDAQ) has so far been the worst-performing stock in the Dow for 2006, and I expect the company to 'revert nicely' in 2007 as it faces easier quarterly comparisons as well as an improved environment for technology spending.
"Further, on the latest rally we are seeing a renewed interest in large-cap stocks, as well as a shift to technology stocks. Now I know I've never been a big bull on tech stocks. Quite frankly, it's hard for me to get a handle on the business models of tech companies. Still, there's no denying that a number of tech stocks offer decent values.
"Furthermore, I think capital spending on technology will surprise people in 2007. And the move back into large-cap stocks should help some of the biggest tech companies. Of course, saying the time is ripe for a rebound in technology is one thing; choosing those stocks likely to benefit is quite another.
"To that end, Intel stands out as an opportunity for DRIP investors. The last 12 months have not been kind to these shares. However, Intel has a history of big rebounds following periods of underperformance, and I think the stock is reasonably cheap at current levels -- trading just above 17 times trailing earnings -- and should perform much better in 2007.
"For those who use dividend reinvestment plans, Intel does offer direct-purchase plans whereby any investor may buy the first share and every share directly from the company. Intel's direct-purchase plan has a minimum initial investment of $250. Subsequent investments may be as little as $50."
