INTC took a hit on earnings but we think it’s way overdone. 

Our investing plan all along that their investment cycle would end this year at worst but it may be worse because they’ve shifted to more AI and that’s costing them many Billions more than originally planned. BUT, on the other hand, there’s stimulus money coming in.

Still, back to $30.80 again is just as silly as it was last time if you are a long-term player.

At this price – you can buy INTC for $127Bn, which seems like a joke!

In 2018-2021 revenues were about $75Bn and earnings were about $20Bn. Last year was an investing year and they only made $1.7Bn (75x) and 2024 should be $6Bn (21x) and next year maybe $10Bn (13x) and that’s just on the road back to $20Bn+ in the future so, do you want to buy the company now, for $150Bn, knowing you’ll be getting 7.6% back in 2025 and hopefully more like 15% down the road?

Here’s the analysis by Warren:  

 🤖  Intel’s recent financial and strategic maneuvers reflect a challenging period characterized by significant competition and execution hurdles, particularly in areas crucial for its future growth like AI and foundry services. Based on the detailed materials provided, here’s an analysis of Intel’s earnings, strategic outlook, and a fair value estimate for January 2026:

### Financial Performance and Guidance
Intel’s financial results show a mixed scenario with some segments, like Client Computing, showing growth due mainly to cyclical factors, while other key areas like Data Center and AI underperform due to strong competition from rivals like AMD and Nvidia. The significant downturn in guidance, with expected revenue falling short of consensus estimates, reflects ongoing struggles in key business areas.

### Strategic Analysis
Intel’s strategy appears to focus on regaining technological parity with competitors through aggressive node development and expansion into foundry services. However, substantial challenges remain, particularly around execution risks associated with rapid technological advancements and the shift in market dynamics towards AI accelerators, where competitors have a more established presence.

### Fair Value Estimate for January 2026
Considering the competitive landscape, Intel’s strategic plans, and financial forecasts, a fair value estimate for Intel in January 2026 can be approached by examining expected financial metrics and growth trajectories. Assuming Intel manages to stabilize its foundry business and sees gradual improvements in AI and other high-growth areas, we can project a modest growth in its financials.

Using a discounted cash flow (DCF) analysis, factoring in the expected revenue growth and margin improvements, and assuming a discount rate reflective of the high uncertainty and execution risks, a fair value estimate for Intel by January 2026 could be around $50 per share. This estimate assumes that Intel successfully executes its strategy without significant setbacks and begins to reap the benefits of its investments in foundry and AI technologies.

Summary

Intel is at a critical juncture, facing significant execution challenges but also possessing substantial opportunities in high-growth areas. Investors should closely monitor Intel’s progress on its strategic initiatives and its ability to respond to competitive pressures.

And here are his notes on the Conference Call:  

 🤖  The Intel Q1 2024 earnings call, led by CEO Patrick Gelsinger and CFO David Zinsner, provided a comprehensive update on the company’s financial health and strategic direction, including insights into market trends, technological advancements, and future expectations. Here’s a detailed summary along with key quotes that could be insightful for investors:

### Key Financial Highlights:
– **Q1 Revenue**: Reported at $12.7 billion, aligning with guidance and reflecting a 9% year-over-year increase.
– **EPS**: Above guidance, demonstrating effective cost control and operational leverage.
– **Gross Margin**: Reported at 45.1%, showing improvement and beating guidance.

### Strategic Initiatives and Outlook:
– **Intel Foundry Services (IFS)**: Significant emphasis on the growth of IFS, with expectations to turn IFS into a key player in the foundry market by 2030. Intel highlighted new customer acquisitions and the strategic importance of securing a U.S.-based supply chain for semiconductor manufacturing.
  
 **Quote**: “We hosted our first-ever Intel Foundry Direct Connect…we announced our position as the national semiconductor champion…this signals significant federal support and aligns with our strategic direction to strengthen our foundry capabilities.” – Patrick Gelsinger

– **Product Roadmap**: Intel is focused on advancing its AI and server capabilities, with specific mention of the next-generation Gaudi 3 accelerator and improvements in AI PC market offerings. The company sees AI integration as a major growth driver and differentiator.
  
 **Quote**: “Within client, we are defining and leading the AI PC category…we expect significant growth from our Gaudi products in the AI space.” – Patrick Gelsinger

– **Market and Financial Outlook**: Intel expects continued revenue growth into 2025, supported by enterprise and data center recovery, and AI market expansion. The company remains cautious but optimistic about overcoming current supply chain constraints and market volatility.

 **Quote**: “We continue to see Q1 as the bottom…expect sequential revenue growth to strengthen throughout the year and into 2025.” – Patrick Gelsinger

### Investor Concerns and Management Responses:
– **Supply Constraints**: Intel acknowledged ongoing supply constraints but expressed confidence in resolving these issues to meet rising demand, particularly in AI PCs.
  
 **Quote**: “We are racing to catch-up to upside requests… constrained by wafer-level assembly supply, impacting our ability to meet demand for our Core Ultra-based AI PCs.” – Patrick Gelsinger

– **Competitive Landscape**: In response to questions about competition and market share, especially from AMD and in the face of rising ARM adoption, Gelsinger emphasized Intel’s technological advancements and roadmap execution as key to maintaining and growing Intel’s market share.

 **Quote**: “We have rebuilt our Grovian culture and execution engine and are on track to completing our five nodes four year goal…in so doing, we are in a unique position with at-scale EUV technology.” – Patrick Gelsinger

Overall, the call highlighted Intel’s strategic focus on leveraging its manufacturing and technological capabilities to capitalize on emerging market trends, particularly in AI. Despite the challenges, Intel’s leadership expressed a strong belief in the company’s strategic direction and its potential to drive significant growth and innovation in the coming years.

They do have $24Bn in debt but also $25Bn in the bank but the current Debt/Earnings is very painful-looking and that’s keeping people away but, as a new play on INTC, I’d go with:

• Sell 10 2026 $35 puts for $7.20 ($7,200)
• Buy 25 2026 $25 calls at $9.75 ($24,375)
• Sell 20 2026 $40 calls for $3.65 ($7,300)
• Sell 10 July $32 calls for $1.50 ($1,500) – you might have to wait a bit.

That’s net $8,075 on the $37,500 spread with a very reasonable target and we have 6 more quarters to sell for $9,000 so it will be a net free spread by the time we get to the end – how can you not love it? Upside potential at $35 is $29,425 and that’s 364% – even without the additional short call sales.

China/Tommy – Vaccines work, people will get mild cases and move on with their lives.  It's simply not practical to hide out from Covid as it's not like it's going to go away and stop bothering people.  

MDT/Tully – They only pay 3% and they are too volatile.  IBM is our Stock of the Year and still stubbornly at $135 (because it's so great) and pays a lovely $6.60 per $135.78 share (4.7%).  You can buy the stock and sell the 2024 $125 calls for $25 and that nets you in for $110.78, called away at $125 with a 14% gain in 18 months plus the dividend – better than keeping it in the bank and, if they drop 20% to $108, you can sell the 2024 $100 puts (now $8.65) for what the $125 puts are $14 or better and then your net is $96.78.  

And, of course, there's CIM at $9.57, who pay a $1.32 dividend (13.4%) and you can buy those shares and sell 2024 $10 calls for 0.80 and the 2024 $8 puts for $1.50 and then you are in for net $7.27, called away at $10 with a $2.73 (37.5%) gain and collecting 0.33 (4.5%) PER QUARTER while you wait.  How can you not love that?

Lovesac trades higher after earnings topper

LOVE -22.08%Jun. 08, 2022 7:47 AM ET

The Lovesac Company (NASDAQ:LOVE) gained in early trading on Wednesday after reporting a 42.2% rise in comparable sales during Q1 with strong growth seen across showrooms and on the Internet.

Total sales rose 56% during the quarter to outpace the 44.8% increase in operating expenses. Gross margin fell to 51.1% of sales from 55.6% a year ago as distribution costs and tariff expenses dragged. Adjusted EBITDA was up 19.5% to $6.4M.

The increae in comparable showroom sales during the quarter was tied to higher point of sale transactions with lower promotional discounting, a strong Easter promotional campaign and the addition of 31 new showrooms, 13 kiosks, and 2 mobile concierges compared a year ago.

Net income was $1.9M in Q1 vs. $2.1M a year ago.

Lovesac (LOVE) ended the quarter with an inventory position of $123M vs. $56.0M a year ago. The co,pany said the higher inventory position was to support growth and maintain industry leading in-stock positions, coupled with an increase in freight capitalization related to an increase in inbound freight expense.

CEO outlook: "Looking ahead, we continue to focus on product innovation, most obviously represented by our still-new StealthTech invisible home audio solution, efficient and targeted marketing and campaigns, channel expansion with new and existing partners, and a focus on operational excellence."

Shares of Lovesac (LOVE) were up 1.55% premarket to $38.59 following the earnings topper.

I like these guys but they are getting sold heavily on this news.  They sell modular furniture and $28 is just $430M in Market Cap and they expect to make $50M this year and $70M next, which is on-par with their growth track.  Let's take advantage of this silly reaction and add them to our Future Is Now Portfolio:

• Sell 5 LOVE Jan (as far as they go) $25 puts for $5 ($2,500)
• Buy  10 LOVE Jan $22.50 calls for $10.50 ($10,500) 
• Sell 10 LOVE Jan $30 calls for $7 ($7,000) 

That's net $1,000 on the $7,500 spread so $6,000 of upside potential if they can just hold $30.

In the Earnings Portfolio, let's:

• Sell 10 LOVE Jan $25 puts for $5 ($5,000) 
• Buy 25 LOVE Jan $22.50 calls for $10.50 ($26,250) 
• Sell 25 LOVE Jan $35 calls for $5.50 ($13,750) 

Here we're taking a bigger position as this portfolio has more cash and is way ahead.  It's net $7,500 on the $31,250 spread so we have $23,750 (316%) in upside potential – but that's for just 6 months, so very nice.  

From our Morning Report:

Buying habits are changing.  

This is not news to people who've been listening to our Live Trading Webinars for the past few months or followed along in our PSW Reports or our Live Member Chat Room (all of which you can be join right HERE).   In fact, just last Thursday we decided TGT was cheap enough and opened the following trade at 1:40 pm for our Long-Term Portfolio:

• We talked about how silly TGT is at $160 and we sold 5 2024 $200 puts in the LTP for $19.85 ($9,925) and there's nothing wrong with that TARGET (so clever!) so let's add 15 TGT 2024  $150 ($32.50)/200 ($13.50) bull call spreads at $19 ($28,500) and that will put us in overall at net $18,575 on the $75,000 spread.   If TGT goes lower, we sell 50 more calls and add 10 more longs.  

We already had a loss on the puts but we sold 5 2024 $200 puts for $19.95 so our net target on 500 shares is $180.05 and our position looks like this:

TGT Short Put	2024 19-JAN 200.00 PUT [TGT @ $159.67 $-1.37]	-5	4/7/2022	(591)	$-9,925	$19.85	$30.53	$-19.85			$50.38	–	$-15,263	-153.8%	$-25,188
TGT Long Call	2024 19-JAN 150.00 CALL [TGT @ $159.67 $-1.37]	15	6/2/2022	(591)	$48,750	$32.50	$-0.48				$32.03	$-1.26	$-713	-1.5%	$48,038
TGT Short Call	2024 19-JAN 200.00 CALL [TGT @ $159.67 $-1.37]	-15	6/2/2022	(591)	$-20,250	$13.50	$-0.65				$12.85	$-0.93	$975	4.8%	$-19,275

TGT should be down around $145 this morning on the news but taking a writedown on inventory is not really news and TGT expects to return to normal margins (6%) in the second half of the year so, if you are a long-term investor, NOW is the time to be buying, not selling.  When a stock plunges 10%, there are things we can take advantage of and thing one will be selling 10 of the 2024 $150 puts for $25.  That will be a pre-roll of the short $200 puts but, since we don't think $180 is an unreasonable target – we're not going to buy those back until TGT bounces – perhaps next quarter.

The other thing we can take advantage of is the way the $140 or $130 calls that are in the money will lose significantly more price than the out of the money 2024 $150 calls we have – which will gain premium as the volatility of the stock goes up.   We will take advantage of that by rolling our $150 calls (now $32.03) to the $140 calls ($37.50 at yesterday's close) or the $130 calls ($44 at yesterday's close) as long as we can pay less than $5 for $10 worth of position.

Assuming we spend $5 to roll to the $140 calls, that would be $7,500 spent for the roll and $25,000 collected on the puts and we paid $18,575 for the overall position so now our net cash in drops to $1,075 for the $140/200 spread that is $7,500 in the money at the assumed $145.  We are obligated to own 500 shares at $200 ($100,000) and 1,000 shares at $150 ($150,000) so our commitment is owning 1,500 shares of TGT at $166.66.  

As long as TGT stays over $120, then our downside risk is about $45 x 1,500 shares = $67,500 but we would mitigate that by rolling our short puts and selling short calls to cover.  For example, if we are assigned the stock at $166.66 and we sell the 2024 $140 calls for $35, then our net would be $131.66 

This is a process called "scaling in" to a position – we begin with a small commitment and then, if the stock gets even cheaper for what we consider to be poor reasons – we adjust and add to it. In the case of TGT, sales are not off – they simply have the wrong mix of inventory as consumers are scaling back their spending habits and they need to adjust but $145 is $67Bn in market cap for TGT, who made $6.9Bn last year and, even with the adjustments, should make $4Bn this year and $6Bn again next year so $67Bn is stupidly cheap – and we'll take advantage of it!  

This is why we like to have plenty of cash (75% in our LTP) on the sideline in a choppy market – you never know when things are going to go on sale…

After the open, we officially are going with:

TGT/Millard – From scratch, I'd go with:

• Sell 5 2024 $150 puts at $23 ($11,500)
• Buy 15 2024 $130 calls at $38.50 ($57,500)
• Sell 15 2024 $170 calls at $18.25 ($27,375)

That's net $18,625 on the $60,000 spread with $41,375 (222%) upside potential in 18 months if TGT can get back to $170, 

Officially, for the LTP, we're selling 10 more 2024 $150 puts for $23 (opened at $24) and we are rolling the 15 2024 $150 calls (now $28.50) to 15 2024 $140 calls at $33.50 for net $5 ($7,500).  Unfortunately, TGT bounced back very fast – probably because I mentioned it in the main post, so my bad.

In the LTP, let's sell 1 GOOGL 2024 $2,000 put for $200 ($20,000).  I think we have good support there – $2,400 is right about 20x so $2,000 is about 17x and our net $1,800 is 15x and we can always roll from there.  

We're obligating ourselves to own 100 shares of GOOGL at net $1,800 so $180,000 so make sure it fits in your portfolio but nice to get paid $20,000 to promise to buy GOOGL 25% off the current price.

We have not had a Top Trade on INTC since December and it's $5 cheaper now so a good time for a new one.

As I said in last week's Webinar, I expected INTC is already building foundries to help ease their supply chain issues and Samsung is now talking with them about it, which is a very good sign.

Everything I liked about INTC at $50 I like 10% more at $45 ($44.12, actually) as that's $182Bn and their "slump" last year earned $19.8Bn but this year and next more like $14.5Bn as they are spending $5Bn a year building foundries to ensure they never run out of components.  Unlike most traders, I don't mind when companies invest in themselves.

INTC, by the way, has no net debt and pays a $1.46 (3.28%) dividend if you are into that sort of thing.  In the LTP, we just rolled the 2024 $40 calls down to the 2024 $30 calls and now we have this:

That's not bad as a new trade but, as a new, new trade – I'd go for this:

• Sell 10 INTC 2024 $45 puts for $7.50 ($7,500)
• Buy 20 2024 $40 calls for $9.25 ($18,500)
• Sell 20 2024 $50 calls for $5 ($10,000) 

That's net $1,000 on the $20,000 spread that's $8,400 in the money to start and the upside potential is $19,000 (1,900%) if INTC can scratch it's way back to $50 in the next 18 months.  You see, there's no need to bet on crazy stocks or take crazy risks to make huge returns.  The worst case in this spread is owning 1,000 shares of INTC for net $46,000 or $46/share – just a little bit more than buying the stock today and, of course, we can roll the short calls to lower strikes in 2025.

In the LTP, let's do the following trades from our Watch List:

• Sell 10 JD 2024 $45 puts for $10 ($10,000) 
• Buy 25 JD 2024 $40 calls for $22 ($55,000)
• Sell 25 JD 2024 $60 calls for $13 ($32,500) 

That's net $12,500 on the $50,000 spread that's $32,500 in the money.  Upside potential is $42,500 (340%).

MDT had a recent failure in glucose monitoring but it's a $141Bn company at $101 with $32Bn in revenues and $7.5Bn in profits and generally solid growth despite little mis-steps like this one.  For the Future is Now Portfolio, let's:

• Sell 5 MDT 2024 $90 puts at $8.25 ($4,125) 
• Buy 15 MDT 2024 $100 calls at $13 ($19,500) 
• Sell 15 MDT 2024 $110 calls for $9.25 ($13,875) 

That's net $1,500 on the $15,000 spread so we have $13,500 (900%) of upside potential at $100 – a 10% bump from today.  

We just got more aggressive on DIS and BA in the LTP so that leaves us missing in the LTP:

• Sell 20 GLW 2024 $35 puts for $5.60 ($11,200) 
• Buy 50 GLW 2024 $35 calls for $5 ($25,000) 
• Sell 50 GLW 2024 $45 calls for $2 ($10,000) 

That's net $3,800 on the $50,000 spread and it's aggressive with the targeting but having $46,200 (1,215%) of upside potential means that when GLW gets back to $40, we can sell something like 15 Aug $40s for $2 (current price of the $35s) and that puts $3,000 in our pocket and drops our net to $800.  Do that a few times and we don't need this stock to go up to be a winner!  

BurgerFi International is called a post-COVID winner by BTIG

BFI +1.72%May 17, 2022 11:12 AM ET

BTIG stayed positive on BurgerFi International (NASDAQ:BFI +2.4%) after taking in the restaurant operator's earnings report.

"Though BurgerFi same-store sales were sizably below our estimate, mostly owing to the Omicron disruption, revenue and adjusted EBITDA were largely in-line with our estimates owing to stronger Anthony's sales," noted analyst Peter Saleh.

Saleh and team see the BFI quarter as the low point for the year with sales and restaurant margins forecast to show steady improvement through the year as COVID fades, menu pricing builds and heightened commodity inflation is lapped.

BFI is still rated at Buy at BTIG with the chain's development opportunity, margin potential and sales recovery all noted. Lower industry-wide valuation multiples led BTIG to cut its price target to $8.50 from $11, which after the more than 50% drop this year still leaves plenty of upside potential.

Read BurgerFi's (BFI) earnings call transcript for a detailed breakdown on how the company is approaching price increases across its menu.

I'm surprised to see BFI so low.  $3 is $64M in market cap and they have 118 locations so we're valuing at just $542,372 per location (93 are franchises, 25 owned).  Only $45M in debt is not a big deal, $15M in cash  and maybe a $24M burn this year (started 2019 with $33.6M in sales).  At $64M, give them until 2025 and they should be at $400M in sales with $20M in profits at least and $64M won't even be comprehensible as a low.  

They also acquired Anthony's Coal Fired Pizza and Wings, which I think was a good add for them.  

• They do have options but very thinly traded but, in the Future is Now Portfolio, let's sell 40 of the 2024 $2.50 puts for $1 as that's a net $1.50 entry so we're collecting $4,000 with a $6,000 risk if they go BK – nothing wrong with that.  The 2024 $2.50 calls are $1.45 and the $7.50 calls were 0.65 this morning so that net 0.80 spread is interesting enough to buy 50 of for $4,000 and we'll see how that goes.   From the perspective of our whole spread, we're in for net $0 on the $25,000 spread and our worst case is only owning 4,000 shares at $2.50 ($10,000).  

And, back to bargain – hunting.  How about JPM, who are down to $119, which is "only" $350Bn and they made $48Bn last year but $35Bn is more "normal" for them.  Inflation should grow deposits and, of course, if we do have some sort of collapse they are too big to fail and they get to buy up their competition for 10 cents on the Dollar.  You can sell the 2024 $100 puts for $10.50 and if that's not free money – I don't know what is.

For the LTP:  

• Sell 10 JPM 2024 $100 puts for $10.50 ($10,500) 
• Buy 25 JPM 2024 $120 calls for $18 ($45,000) 
• Sell 25 JPM 2024 $140 calls for $10 ($25,000) 

That's net $9,500 on the $50,000 spread with $40,500 (426%) upside potential at $140.  Since we're very happy to own JPM at $100, the spread is a small commitment and, if for some reason JPM drops 20% (our puts are still safe) then we'll be THRILLED to roll the long calls down $20 for $10 more ($25,000) and we'd be in the $100,000 spread for net $34,500 with $65,500 upside potential – we can certainly live with that!  

When the worst case sounds better than the base case – it's a good trade!  

By the way, we did have BA in the LTP – it was our Top Trade on the 12th:  

Even cheaper now!  

When the VIX is around 30, we need to look at everything and think "How can I sell more premium?"  Rolling down has that affect as we roll to a position (usually) that has less premium and we sell covering calls that have more.

In this case the BA 2024 $170s are $28.28 and the $150s are $37.15 so net $8.87 to roll down $20 is worth $17,740 to widen the spread by $40,000.  Owning 500 shares at net $170 certainly doesn't scare us and I think we'll save a potential DD for if they go lower.  In theory, we could buy 20 more of the $150s ($74,300) and sell 5 2024 $175 puts for $40 ($20,000) and we sell 20 $200 calls for $18.50 ($39,000) then we're only spending net $15,300 to buy another $100,000 spread so that spread (5 short puts and 20 of the $150/200s) is a no-brainer as a new trade.  Now that I write it out – I decided to make it official as it's too good to pass by.  

While we are at it then, let's sell 5 GNRC 2024 $180 puts in the Earnings Portfolio for $18 ($9,000) to remind us to keep an eye on them.  No worries about the net $162 entry, which is $70 (30%) below the current price.