>>Intel, for all its greatness, is still a CYCLICAL stock. Right now we are at the peak of the cycle.
I don't think so. Not that the business cycle has been repealed or anything, but I think you'll be surprised how far this stock runs.
In the 80's PC's were a novelty item. LANS didn't really come into their own own until 1984. Routers not until 1989. Windows not until 1990. Now PC's (and importantly, servers) are economic necessities...globally. Without computing and its attendant communications infrastructure no entity anywhere can attract capital. The rest of the world is moving headlong into client/server computing, mitigating any softness in the US.
Intel is in control of its markets...much more so than Microsoft. They are the world's sole-source supplier. It's about the closest thing to having the patent on the steam engine during the industrial revolution. I can't overstate this point.
Intel's margins are expanding while their die capacity is expanding. Not typical of cycle peaks.
Server sales are booming, courtesy of client/server app vendors, NT, and folks like our best friends in Mountain View. Pentium Pro's are in very short supply. They are selling at rich premiums on the gray market. Unlike Micron's market last year, there are no Koreans or Taiwanese competitors ready to provide supply.
There is an important PC upgrade cycle starting in the US, particularly in portables.
Finally, everything gets overdone, and Intel, the key proprietary vendor to the strongest sector of the global economy, is cheap relative to the market. I could compare this stock's model quite favorably to the likes of Merck. |
