Is Intel Stock The Best Play For Internet Of Things?

  • Intel is already showing intelligent solutions for retail and fashion.
  • The big market is in controlling factories and public infrastructure.
  • No company has the financial strength Intel has to pursue this $1.7 trillion market.

Intel (NASDAQ:INTC) has decided that the Internet of Things is its best play for growth.

I began writing about the IoT over a decade ago. Motes, sensors, and tiny processors are affixed to products, monitoring their condition, coordinating repair, and adjusting on-the-fly. Inventory solutions can find your keys, I wrote, and monitoring solutions can water your lawn. Health solutions can prevent heart attacks.

Intel is now focusing heavily on IoT, showing retail solutions that can measure customers for clothes at a glance and track clothes in stores. It’s already 4% of the company’s turnover. A computer-on-a-chip called Curie is being shown at fashion shows, used for health monitoring and CGI displays that take place around clothes. Intel's IoT technology helped transform Lady Gaga into the late David Bowie during the recent Grammy Awards telecast.

But that’s the flash end of the business. The big money is in industry, in turning an Inventory of Things into an Inventory of Systems that can control refineries, collect big data that can be used to improve production and prevent accidents. IDC now sees this as a $1.7 trillion market within five years.

Standards are going to be vital in the IoT, to enable interoperability, and Intel is busy creating and negotiating such standards with software companies as well as carriers. Lacking Americans’ concerns about privacy, and having acquired many factories as western companies sought cheap labor, Asian companies represent the hot end of the market. That’s one reason why U.S. investors remain cool to the concept.

Thus none of this has yet hit Intel stock, which is down almost 17% over the last year as PC sales have slowed and the company’s efforts in mobile have continued to flounder. But no chip company has Intel’s financial strength, profits averaging 25% on roughly $15 billion in sales each quarter, cash flow averaging over $15 billion per year, a balance sheet showing over $100 billion in assets and long-term debt that could be instantly repaid, in a crunch, with the cash and short-term instruments at hand.

INTC stock chart

Source: Intel stock price chart by amigobulls.com

It’s not often that an investor gets a chance to get in on the “ground floor” of something while at the same time buy a 3.6% yield that is covered by net income three times. It’s not often you can buy a stock with a Price/Earnings multiple below the market, that has both safety and leadership in an area that is about to explode. But that is what Intel is looking at, today.

Things with intelligence are becoming parts of intelligent systems, and Intel is ahead of the pack facing this opportunity, with plenty of financial strength to lead for the long haul. You don’t get better investment opportunities than that.

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  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
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