Breaking News
Investing Pro 0

1 Stock to Buy, 1 Stock to Dump This Week: Visa, Intel

By Jesse Cohen/Investing.comStock MarketsJan 22, 2023 08:16AM ET
www.investing.com/analysis/1-stock-to-buy-1-stock-to-dump-this-week-visa-intel-200634587
1 Stock to Buy, 1 Stock to Dump This Week: Visa, Intel
By Jesse Cohen/Investing.com   |  Jan 22, 2023 08:16AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
INTC
+0.42%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
V
+0.07%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
+0.33%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DJI
+0.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BA
+2.49%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CVX
+1.46%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Microsoft + Tesla earnings, Q4 GDP data, PCE inflation in focus.
  • Visa stock is a buy amid strong profit, sales growth.
  • Intel shares set to underperform amid weak results, sluggish outlook.

Stocks on Wall Street rose on Friday, but the major averages ended the week mostly lower after the latest batch of economic data-fueled recession worries.

For the week, the blue-chip Dow Jones Industrial Average and the benchmark S&P 500 lost 2.7% and 0.7% respectively, while the technology-heavy Nasdaq Composite managed to eke out a gain of 0.5%.

Source: Investing.com

The coming week is expected to be another eventful one as Q4 earnings season shifts into high gear, with reports expected from Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), IBM (NYSE:IBM), and Texas Instruments (NASDAQ:TXN). The earnings agenda also consists of other high-profile companies, such as Boeing (NYSE:BA), Chevron (NYSE:CVX), 3M (NYSE:MMM), Johnson & Johnson (NYSE:JNJ), AT&T (NYSE:T), Verizon (NYSE:VZ), Mastercard (NYSE:MA), Southwest Airlines (NYSE:LUV), General Electric (NYSE:GE), and Lockheed Martin (NYSE:LMT).

In addition, there is also important fourth quarter growth data due on Thursday, which will provide more clues as to whether the economy is heading for a recession. The personal consumption expenditures (PCE) price index - which is the Federal Reserve’s preferred inflation measure - then comes out Friday morning.

Regardless of which direction the market goes, below we highlight one stock likely to be in demand and another which could see further downside.

Remember though, our timeframe is just for the upcoming week.

Stock To Buy: Visa

After closing at their best level in over nine months on Friday, I expect shares of Visa (NYSE:V) to extend their rally in the coming week as the credit card giant is forecast to deliver strong profit and sales growth when it reports its latest financial results.

As per the options market, traders are pricing in an implied move of around 4.2% in either direction for V stock following the earnings update due after the U.S. market closes on Thursday, Jan. 26.

In my view, a global recession is not anticipated to cut deep into Visa’s quarterly performance. Indeed, an InvestingPro survey of analyst earnings revisions points to growing optimism ahead of the report, with analysts raising their EPS estimates 10 times over the last 90 days despite the challenging macroeconomic backdrop.

V Earnings
V Earnings

Source: InvestingPro

Consensus estimates call for the payment processing company to post earnings per share of $2.01 for its fiscal first quarter, as per Investing.com, improving 11% from EPS of $1.81 in the year-ago period. If that is in fact the reality, it would mark the seventh straight quarter of accelerating profit and the highest since Q4 2014.

Meanwhile, revenue is forecast to increase 9.1% year-over-year to $7.7 billion, reflecting an upbeat performance across its payments network as it benefits from a robust combination of rising spending volumes and growing transactions due to higher credit-card usage rates both domestically and internationally.

Demonstrating the strength and resilience of its underlying business, Visa has either matched or beaten Wall Street’s top line expectations in every quarter dating back to at least Q2 2013, while trailing revenue estimates only thrice in that span.

As such, I expect the company, which is one of the 30 components of the Dow Jones Industrial Average, to forecast another period of upbeat profit and sales growth thanks to favorable fundamentals and continuing positive trends into 2023.

V Daily Chart
V Daily Chart

Source: Investing.com

V stock ended Friday’s session at $224.31, its highest close since April 5, 2022. Shares of the Foster City, California-based corporation have run hot in recent weeks, with the stock marking a gain of almost 30% since reaching a mid-October 52-week low of $174.60.

Visa shares have tacked on 8% so far in 2023. The stock held up much better than the broader market last year, falling just 4% in 2022. At current levels, Visa has a market cap of $462 billion, making it the seventh most valuable company in the world.

Stock To Dump: Intel

I believe Intel's (NASDAQ:INTC) stock will underperform in the week ahead, with a potential revisit to its recent lows on the horizon, as the struggling semiconductor company prepares to deliver disappointing financial results after the closing bell on Thursday, Jan. 26 due to the difficult economic environment.

Consensus calls for the Santa Clara, California-based chipmaker to report fourth quarter earnings per share of $0.20, collapsing more than 80% from EPS of $1.09 in the year-ago period. If confirmed, it would mark Intel’s smallest quarterly profit in at least a decade, underscoring the several challenges the company currently faces.

Meanwhile, revenue is forecast to plunge 25.7% year-over-year to $14.5 billion, which would mark the lowest since Q2 2016, amid a sluggish performance in its all-important chip business, weak data center sales, as well as dwindling PC demand from consumers.

INTC Earnings
INTC Earnings

Source: InvestingPro

Not surprisingly, profit expectations have been revised downward a whopping 30 times in the 90 days prior to the earnings release, according to InvestingPro.

Based on moves in the options market, traders expect a sizable swing in INTC shares following the results, with a possible implied move of roughly 8% in either direction.

Looking ahead, I expect Intel’s forward guidance to signal another challenging year as I become increasingly concerned by the chipmaker’s future prospects.

Once widely considered the undisputed leader in the computer processors industry, Intel has been steadily losing market share in recent years to rivals such as Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), and Taiwan Semi (NYSE:TSM). In addition, its business has also suffered as more and more Big Tech companies, including Apple (NASDAQ:AAPL), Microsoft, and Amazon (NASDAQ:AMZN), opt to develop their own chips and microprocessors.

INTC Daily Chart
INTC Daily Chart

Source: Investing.com

INTC stock, which fell to a bear-market low of $24.59 in mid-October, closed at $29.22 on Friday. At current valuations, the out-of-favor tech company has a market cap of $120.6 billion.

Shares, which have rallied to start the new year along with the tech-heavy Nasdaq, are up 10.5% through the first few weeks of 2023, following an annual decline of 48.7% in 2022. Notwithstanding the recent turnaround, INTC stock remains about 58% away from its January 2020 all-time high of $69.29.

Disclosure: At the time of writing, I am long Visa and short Intel. I also maintain a small short position on the S&P 500 and Nasdaq 100 via the ProShares Short S&P500 ETF (NYSE:SH) and ProShares Short QQQ ETF (NYSE:PSQ). I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials. The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.

1 Stock to Buy, 1 Stock to Dump This Week: Visa, Intel
 

Related Articles

1 Stock to Buy, 1 Stock to Dump This Week: Visa, Intel

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (13)
Xie You Wen
Xie You Wen Jan 29, 2023 10:12AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
u r right on this
Respect Corrections
Respect Corrections Jan 26, 2023 8:53PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sell everything
Computer Repair
Computer Repair Jan 26, 2023 7:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
payday for you tomorrow
Kamal Hamdard
Kamal Hamdard Jan 26, 2023 4:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Right again Jesse
Crim Jamer
Crim Jamer Jan 26, 2023 4:25PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Seems like you're right
Roy Nisani
Roy Nisani Jan 23, 2023 9:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
please keep shorting, 🙏
John Lakran
John Lakran Jan 23, 2023 8:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
ST on Intel I could see it going anywhere but for Longer Term Im buying here I could care less about a bad few quarters. Ill get Paid to wait and with foundry success 2x in a few years no problem.
miles karki
miles karki Jan 23, 2023 8:45AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why even right this.. U know u have no clue.
In Sight
Insight Jan 23, 2023 7:38AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Easy short @Intel. Past Quarter = weak. Consumer sales are on a 4 years Q4 (YoY) low according to data from Gartner. And in general, seasonally Q1 is a weak quarter. Guidance  = weak/rugged for H1.  Pat himself already said a couple of days ago that H1 will be kina really tough lol. So whats left? Nothing at all. I will wait and see how far Intel gets pumped up ahead of the earnings report and then I get my shorts going on. It should get above 30 at least, to have a solid short. The higher the better. At 32 this would be a dream lol
Kamal Hamdard
Kamal Hamdard Jan 23, 2023 7:38AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I am shorts at 30 already
Abdulsamad Dankaka
Abdulsamad Dankaka Jan 23, 2023 12:43AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Great reviews Jesse
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email