Any industry will eventually consolidate into a handful of players. One may dominate, but within the group of large players, one will usually be a value play. That company tends to have the potential to jump, at least once management finds a catalyst that can move shares higher.
That offers investors a chance to get a solid bargain during a market downturn, and often a dividend growth play on top of that too.
One instance is Intel (INTC). In the chipmaker space, Intel isn’t seen as the innovative name that it was years ago. However, the company is working on a number of initiates to catch up, including a new chip line designed to profit from cryptocurrency mining.
Shares of the company were recently downgraded, and the stock is now off 20 percent in the past year.
However, shares trade at 10 times earnings, sport a 25 percent profit margin, and the stock yields nearly 3 percent right now.
Action to take: As a relative value in the chipmaker space, and with a history of growing dividends, investors may like shares for the long haul at today’s prices.
For traders, shares have been in a downtrend, although shares have started to try and move higher. Traders could fare well with the June $50 calls. Last going for about $2.60, they offer mid-to-high double-digit gains from here.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.