Basic Needs Portfolio Selection: Intel Corporation (INTC)

Another area where Intel Corporation (NASDAQ:INTC) presents an immense growth opportunity is in mobile. I’m not as convinced it’ll be able to make a huge dent anytime soon in the smartphone arena, but it has made strong inroads into the tablet market via Microsoft’s Windows based platform. In Strategy Analytics preliminary first-quarter tablet operating system market share results, Windows improved from having 0% share in 2012 to 7.4% in 2013. This is crucial, as Intel chips absolutely dominate Windows-based architecture. If this trend continues, Intel’s new mobile processors could gain some credibility among industry leaders and gain adoption in the highly competitive smartphone market.

Finally, this is a simple case of valuation, cash flow, and shareholder perks. Relative to the S&P 500, Intel is valued at nearly a 40% discount to cash flow (6.2 versus 9.9 for the S&P 500) while averaging $9.8 billion in free cash flow generation over the past three years. All of this cash certainly isn’t going to waste. It’s fueling Intel’s aggressive R&D programs and adding to the $6 billion in bonds Intel Corporation (NASDAQ:INTC) sold in December to aid in its share repurchases and general corporate purposes.

Source: Nasdaq.com.
*Assumes quarterly payout of $0.225 for the remainder of 2013.

Most importantly, Intel’s cash flow helps support a delectable dividend, which is currently yielding 3.7% and has grown by a whopping 1,025% over the trailing 10-year period.

Stay tuned next week, when I’ll unveil the third selection to the Basic Needs Portfolio

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Intel and Waste Management. It also owns shares of Microsoft and Qualcomm and recommends Cisco Systems and NVIDIA.

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