Great bull piece about why you can still buy Intel, even here (early holiday gift for Paul F., Fuchi, Albert, et al):
Wrong! Rear Echelon Revelations: How Far Can Intel Go?
By James J. Cramer
11/19/98 7:31 AM ET
How far can Intel (INTC:Nasdaq) go?
Everywhere on Wall Street you hear that question. The stock has doubled, isn't it time to get out? How much more can there be left in the stock? Isn't it prudent to get out now? Should I take something off the table?
All I know is that about four years ago I was faced with the same set of questions about this stock. I wrote a column in SmartMoney, when I used to write for the monthly, that said perhaps the more important question is not whether you should sell, but whether you should double down. I answered in the affirmative.
I'd give you the same answer now. I sit at my desk each day and hope that it sells off. I pray for a downgrade. I keep thinking some analyst will lower his forecast instead of raising it. I fantasize for a negative Heard on the Street article to let me buy more cheaper. But we aren't going to get one.
Because Intel is in the sweet spot. Every four or five years it's like this. A confluence of high yields (they don't have to throw away any chips because they aren't up to specs), strong demand and no serious competition on the high lucrative end let Intel's earnings explode. And the stock just doesn't know how to quit. Or, as I used to say when I was trading with my wife: "Intel's galloping, and it won't stop until it gets where it has to go."
How does it happen that the planets align so perfectly? On an elemental level, it is simple supply and demand. There are times when Intel, running flat out, can't make enough microprocessors to satisfy its clients. This is one of those times.
What is truly amazing about this time, however, is that it is occurring during a period of suppressed worldwide demand for virtually everything else. Even more stupendous is that, with the exception of Japan, Intel is seeing an increase in every country's demand for processors in the world. There's that thesis of mine again -- they cut back on deodorant and toothpaste, but not PCs.
China, Thailand and even Indonesia, which can't afford to feed its millions, are showing strong sequential demand.
We can search for reasons why demand is so strong. Replacement of old personal computers. A need to beat the year 2000 problem. The Net. Christmas season channel-filling. None of these is going to explode in your face in the foreseeable future. Which means that Intel isn't done galloping just yet.
Ironically, to resort to Yogi Bera-isms, it won't be over until it is over. In other words, we won't know when the world will be filled with Pentium II processors and demand will be sated. When it is, the stock will go lower, no doubt. It is the "until then" that I think will last longer than expected.
Which is why I'd rather double down then sell Intel at 110 per share.
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