INTEL CORP. $30 - Nasdaq symbol INTC

Computer technology continues to change— and spread— rapidly. We feel the best way to profit from this growth is by investing in well-established companies that lead their markets, like the four we analyze below. All of them have strong earnings and balance sheets. That lets them spend heavily on product development and buy smaller firms with attractive technologies. We have a high opinion of all four, but we see only two as buys right now. INTEL CORP. $30 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.7 billion; Market cap: $141.0 billion; Price-to-sales ratio: 2.6; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.intel.com) is the world’s leading computer chip maker. Its products power 80% of all personal computers. In 2015, Intel’s earnings fell 2.4%, to $11.4 billion from $11.7 billion in 2014. It spent $3.0 billion on share buybacks, so per-share profits gained 0.9%, to $2.33 from $2.31, on fewer shares outstanding. Overall revenue slipped 0.9%, to $55.4 billion from $55.9 billion. Demand for computer chips continues to decline as consumers shift from personal computers to mobile devices. However, Intel is seeing higher sales of chips that power server computers. The company spent $12.1 billion (or 21.9% of its revenue) on research in 2015, up 5.1% from $11.5 billion (or 20.6%) a year earlier. Intel recently completed its $16.7-billion purchase of Altera Corp., a maker of chips called field programmable gate arrays (FPGAs). Users can program them to perform specific tasks, which makes server computers faster. Intel plans to blend Altera’s FPGA technology with its current designs on a single server chip. These integrated chips run much faster than systems that use separate chips. The company predicts FPGA chips will run 30% of the world’s data-centre servers by 2020 as more businesses shift to cloud computing. Altera should add $1.8 billion to Intel’s 2016 revenue. It should also push up this year’s earnings to $2.59 a share; the stock trades at just 11.6 times that estimate. The $1.04 dividend yields 3.5%. Intel is a buy.