Who's Moving the Dow Today? Not the Usual Suspects

Thanks to its modest share prices, Intel  accounts for just 1.2% of the Dow Jones Industrial Average's total value. That didn't stop the chip giant from making a major impact on the Dow today. Intel's 7% overnight plunge tied it with American Express, which is three times as influential, for the title of today's biggest Dow mover.

Intel just presented surprisingly strong results for the fourth quarter -- but with a side of weak forward guidance. Capital expenses are projected to rise about 20% this year as Intel lays the groundwork for dramatic manufacturing upgrades near the end of the decade. These costs will affect income statements for years to come via amortized accounting. If you love bottom-line profits, Intel may not be your bag right now.

On the other hand, Intel's sky-high dividend yield and record-low P/E valuation present a mouthwatering value if you don't believe that the company is dying:


 Chart

INTC data by YCharts.

The company is finding its way in a rapidly changing market landscape. Traditional PC systems are becoming a niche market, rather than a bread-and-butter mainstay, replaced by mobile computing gadgets and bulked-up server systems to keep the mobile devices nourished with data feeds.

Though Intel does have a slew of mobile chips on the table, they're too new and unproven to make much of an impact in 2013. Mobility expert Qualcomm  now sports a larger market cap than Intel. That idea sounded ludicrous just a few years ago, but it's an undeniable reality now.

 Chart

INTC data by Ycharts.

I would argue that Intel remains a rock-solid business that plans for the long term and will come back swinging from these lows. Chipzilla will lift the Dow again.

Interested in Intel?
When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel must find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Better yet, you'll continue to receive updates for an entire year. Click here now to learn more.

The article Who's Moving the Dow Today? Not the Usual Suspects originally appeared on Fool.com.

Fool contributor Anders Bylund owns shares of Intel, but he holds no other position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. The Motley Fool owns shares of Intel and Qualcomm. Motley Fool newsletter services have recommended buying shares of Intel and American Express. Motley Fool newsletter services have recommended writing a covered strangle on American Express. Motley Fool newsletter services have recommended writing puts on Intel. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Portfolio Basics

What are stocks? Learn how to start investing.

View Course »

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Add a Comment

*0 / 3000 Character Maximum