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A Caveat to Playing Intel


Excitement could die down and give way to profit-taking.

There's nothing like leftover pizza. I saw it in the fridge this morning and just couldn't resist. It was a flashback to my college days.

Asian stocks were a mixed bag. The Hang Seng was up 1.95%, but the Nikkei was off 0.16%. European stocks, however, were solidly in the green early this morning. And here in the US, we're currently trading higher.

Here's what I'm seeing this morning:

Intel (INTC):
After the bell last night, the chip giant was out with its third-quarter numbers. It put up $0.33 in the period, which was a nickel north of expectations. It beat on the top line, too.

My thoughts:

1. The top- and bottom-line beat is clearly great news. I think it's going to be the center of attention today and the stock will get a goose early on. The fact that the company said its looking for "$10.1 billion, plus or minus $400 million" in the fourth quarter is good, too, because the estimate I'm seeing is for a smidge over $9.5 billion.

2. And yes -- I still think the shares are a better play than Advanced Micro Devices (AMD). I'm thinking that Intel will hit a new 52-week high pretty early on in the session.

3. I like the shares short and long run. But my one caveat is this: The excitement could die down a bit after today's session -- perhaps even toward this afternoon -- and we could see some profit-taking. To get the next major bump up in share price, Intel will need to pull off another positive surprise, and I'm just not sure what that catalyst (if there is one) might be.

Altera (ALTR):
The chipmaker was out with its third-quarter earnings after the close last night, too. It put up $0.19 in the period, but it was quick to point out in the release that "Third quarter 2009 results include a $4.8 million pre-tax charge relating to a previously announced restructuring." The Street had been looking for $0.19. It painted a pretty good picture for the fourth quarter, as well.

So does this mean I'll be placing my chips into the pot? It was a good quarter, but sorry Altera bulls -- the answer is no.

The horse I'd rather ride in today's session is Intel. I should also point out that I'm a little wary of hopping aboard the Altera train because it's a bit too pricey at more than 31 times (based on last night's close) this year's estimate.

For my previous take on Altera, click here.
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No positions in stocks mentioned.

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