Oversold Stock of the Day: Intel (INTC)
Chipmaker Intel (INTC) can’t seem to catch a break. The company has tried to shift outside computer chips into the phone space and cloud servers. However, it has only found a pushback of fierce competition.
But now, following an earnings miss, shares are heavily oversold and due for a relief rally. That offers traders the chance to benefit.
The chart tells the tale. Shares hit oversold levels with a relative strength index reading of 25. Even with Wednesday’s terrible market action, shares were a relative outperformer. That suggests traders may be starting to go long shares here. The company now trades about 15 percent below its 50-day moving average. So there’s a decent short-term return potential on the long side in the coming weeks.
Action to take: Investors who buy shares here can get a 2.9 percent dividend yield while also looking at a 10-15 percent rally in the coming weeks as shares move off oversold levels.
For traders, the February 2021 $50 calls are a bet on a relief rally at least to the company’s 50-day moving average. Trading for about $1.55 right now, it’s an inexpensive bet with the potential for triple-digit returns on a quick and strong bounce in shares.
Traders should look for mid-to-high double-digit returns, as the company can often take some time to rally strongly.