Continued Chip Demand Makes for Long-Term Buying Opportunities Now

Congress is weighing on legislation to support domestic semiconductor production before it goes on recess. The goal is to counter the global chip shortage. If passed, it will make it easier for mega-factories to be built stateside, but the chip shortage is still likely to continue.

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  • That’s because demand remains strong, and many new technologies require a larger number of more advanced chips than ever before. That bodes well across the industry.

    One company set to benefit from the shortage, and get an extra boost from new legislation, is Intel (INTC).

    Once the leading player in the chip space, it has somewhat lost its innovation to other players. But it’s still a key player for a number of tech components, and could easily benefit from the latest proposed legislation.

    Shares have been knocked down 30 percent in the past year, and the company trades at 10 times earnings. While cheap, the real story is that it’s got an industry-leading dividend payout, with a 3.8% payout now.

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  • Action to take: Shares will likely rebound with the economy. While it may not post as fast growth as other names, the high yield here should make for excellent returns for patient investors over the next few months.

    For traders, the January $40 calls, last going for about $3.25, can offer mid-to-high double-digit growth in the months ahead on a rebound in the stock – or even a quick sale opportunity on any passed legislation in the coming weeks.


    Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.


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