The Week that Was: Banks, Nokia and Intel
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
For both Intel (NASDAQ: INTC) and Nokia (NYSE: NOK) last week was all about one upping the competition at the World Mobile Congress in Barcelona. Though reviews were mixed, most believe Intel’s smartphone and mobile computing chips were a smashing success. Intel reiterated the previously reported agreement with China’s LTE as well as announced deals to provide their Atom chips for France Telecom and India’s Lava International. Sounds like it was a nice trip across the pond.
As discussed last week Nokia unveiled their Dolby smartphone technology along with some specs for their much improved digital camera capabilities while they were in Spain. Though not met with as much fanfare as Intel’s announcements, these are both big steps in the right direction for a company – like Intel – that remains woefully undervalued.
Both stocks are – once again – taking it on the chin, making them both even better opportunities for investors. Intel in particular -- along with its industry leading 3.18% dividend – is a great basis for a portfolio. Nokia investors are taking on more risk than some others, but a 5.1% dividend will ease some of that uneasiness. Not to mention the partnership with Microsoft, the distribution agreement with AT&T and management’s shift in focus to the explosive smartphone market. More risk? Yeah, but give this stock 6 months of continued growth in sales and heads will slowly begin to turn.
As for Intel, don’t try and figure out why the industry leader trades at 11 times trailing earnings and about 10 times future earnings. And as noted in past articles, Intel is notorious for undershooting future performance. Future earnings are inevitably going to better than expected – they always are.
Sure investors are blaming the drop in most all technology stocks on poor global chip sales and that makes sense, but it’s also short sighted. As Europe gets their collective acts together and slowly improving economic conditions here at home take hold, the balance of 2012 should be strong for Intel shareholders.
Though there was consternation after last week’s article on the banking industry in general and Wells Fargo (NYSE: WFC), Citi (NYSE: C) and Bank of America (NYSE: BAC) in particular, the gist remains the same. After legislatively limiting what banks can and can’t do to generate fees, coupled with an artificially low interest rate environment it’s difficult to try and compare apples to apples any longer. So why try? Banking’s changed and so too should the manner in which the industry measures results.
Bank of America and JP Morgan have underperformed – albeit for different reasons – but investors haven’t cared as the industry enjoys a stellar run in 2012. But Wells and even Citi are the two that stand out in the long term. Both are growing the right way – via loans, loan quality and traditional banking services – growth that is sustainable over time.
Gas prices, Greece and domestic economic issues will continue to impact markets and stock prices. But there are investment opportunities out there – Intel, Nokia and Citi to name but a few.
The investment opinions included are just that, opinions. Investing involves risk, as you well know, so consider your decisions wisely. Tim holds no position in the securities mentioned in this article.