A year-to-date gain of approximately 7.24% for shares of Intel Corporation (INTC) has likely been influenced by continual institutional support for the stock. In fact, the company's institutional ownership rate sits at 70% and will likely grow after Intel reported strong earnings last month. The main factor that drives shares is simply supply and demand – and Intel stock has recently been in demand. Large institutional players have been in accumulation mode as the company continues to outperform expectations. Betting on leading stocks with growing earnings, rising dividends, great technicals and increasing institutional activity can be a smart move for long-term shareholders.

Being that Intel is a leader in the semiconductor space, the growth aspects of the company have continued to improve – thus keeping institutions invested. An analyst at Citi described Intel yesterday as "the Micron of 2018," which gave even more fuel to the stock's recent steady climb. This makes a compelling case for long-term bullish investors. In the perspective of Macro Analytics for Professionals (MAP), the strongest indicator of positive price momentum is obtained by measuring potential institutional accumulation, and since October 2017, Intel has logged 11 of these rare signals. This indicates that demand for Intel shares is strong.

Notably, since MAP flagged the initial potential institutional buy signal in Intel in October, the stock has returned 29.45%. We want to put the odds in our favor and bet alongside big investors who have a favorable outlook on the company. The chart below shows that Intel stock hit a new 52-week high accompanied by institutional accumulation.


Courtesy of TradingView.

MAP's process focuses on identifying companies with healthy fundamentals accompanied by outsized, unusual institutional activity to try and measure potential accumulation/distribution at the single-stock level. By studying these data points, we can hypothesize which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest-quality stocks.

Many of the top performing stocks over the years have received persistent institutional support, telling a narrative of where big firms may see opportunity. Intel has been one of the best recent semiconductor growth stories out there.

When deciding on the strongest candidate for long-term growth, we consider many technical areas important to success. A few of these factors for Intel are as follows:

  • Year-to-date (YTD) outperformance vs. overall market: +~5.13% vs. SPDR S&P 500 ETF (SPY)
  • YTD outperformance vs. sector: +~1.19% vs. Technology Select Sector SPDR ETF (XLK)
  • And most importantly, institutional accumulation signals

On top of a great technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. The areas you want to consider important for continual institutional support are:

  • CFFOCAPEX: +10.3 billion
  • One-year EPS growth rate: +7%
  • Three-year dividend growth rate: +6.2%

Intel checks the box on strong technicals and solid fundamentals, while continuing to gain institutional momentum, which may point to further price appreciation.

Taking a look at the overall picture of the institutional accumulation/distribution activity that we monitor for the broad market, signs have recently shown that buying is increasing since the February sell-off. With the market staging a comeback being led by the tech sector, we want to bet on strong stocks that we believe institutions are buying. We believe Intel has the fundamental outlook and institutional support that are attractive for those looking for stock appreciation, in addition to dividend growth. Intel stock has been gaining rapidly over the past six months with accumulation signals accompanying the move – all of this points to the odds being favorable for the stock.

The Bottom Line

Intel stock represents a potential buying opportunity for the long-term growth investor. Given the recent potential institutional accumulation signal and the outperformance vs. the market, this stock could be worthy of a spot in a bullish growth portfolio.

To learn more about MAP's institutional signals, please visit our "About Us" page.

Disclosure: The author holds a long position in INTC at the time of publication.

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