Is Intel a Comeback Candidate for Income Investors?
By: Paul Dykewicz,
Is Intel a comeback candidate for income investors who like the company’s dividend yield but want to time their purchase for its likely recovery?
The answer depends on how much risk an investor is willing to take in pursuit of any profits that would be produced by a rebound in the sagging share price of Intel (NASDAQ: INTC). Intel officials are aware of areas, such as computer chips, where the company has been struggling and have responded by seeking to redirect financial resources into business opportunities that would generate the fastest growth in the future.
One of the sectors Intel is already working in and is seeking to grow further is security and anti-terrorism products and services. The global security market is projected to produce an average compound annual growth rate (CAGR) of 10% through 2023, according to Market Research Future.
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Is Intel a Comeback Candidate for Income Investors? Pension Fund Chairman Concurs
RADAR USA, Inc. is currently a private company but is intending to raise additional capital in the first half of 2022. Philadelphia-based VSBLTY Groupe Technologies Corp. (OTC: VSBGF), (CSE: VSBY) and (Frankfurt: 5VS) is a provider of security and retail analytics software that announced a license agreement with RADAR USA on Aug. 21 to offer “smart” security cameras and services in the United States and Canada. In contrast, conventional security cameras require human surveillance of multiple video screens at the same time to identify and respond to threats.
VSBLTY uses artificial intelligence (AI) and machine learning in a subscription-based platform to provide retail and security solutions. RADAR USA, formed in 2021, is a collaboration between VSBLTY and RADAR APP in Mexico, where the security network deployment has reached 10,000 cameras.
The security application enables cameras to monitor vast areas, detail weapons and other specific items, as well as identify persons of interest, measure audiences and spot objects and potential threats. The capability is helping to cut crime in places where it has been tested thus far.
“Investors who want to invest in a larger company that also participates in this opportunity should take a look at Intel (NASDAQ: INTC),” said Bob Carlson, who heads the Retirement Watch investment newsletter.
Is Intel a Comeback Candidate for Income Investors? Partnerships Help
For example, VSBLTY and Taiwan-based Ability Enterprise co-developed a first-of-its-kind high resolution camera with self-contained inference logic in February 2021. The camera is the first to be developed and deployed that is able to integrate multiple Intel algorithms to run simultaneously directly and use them in retail and so-called “Smart City” applications. Production units are being integrated into the RadarApp “Smart City” neighborhood program that is having early success in Mexico City.
Jonny Wu, Ability Enterprise’s senior director, said his company was pleased to join forces with two of the world’s “leading technology companies.” In fact, Wu added that Ability Enterprise has collaborated successfully with Intel for some time and looks forward to advancing mutual interests with VSBLTY.
Is Intel a Comeback Candidate for Income Investors? Consider Internet of Things Services
Intel’s Internet of Things services that help with airport security and other security needs include the Extreme Vision Smart Security System, Intelligent Video Analytics Recorder, LiDAR sensors and more, said Carlson, who also serves as chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets.
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“It’s not a large part of the company, but it has the potential to grow as the company uses its established technologies, plus artificial intelligence, to help airports and other places enhance security,” Carlson said about Intel.
BofA Global Research Sees Further Questions for Intel Before Reassessing ‘Underperform’ Rating
BofA Global Research is keeping its market “underperform” rating on Intel due to the company’s current competitive challenges and unanswered questions about its plans to spin off its Mobileye electric vehicle venture in an initial public offering (IPO). The current view is that the upside of the IPO for Intel is limited, wrote BofA analyst Vivek Arya.
The IPO could become “one more distraction,” while Intel is trying to outcompete focused foundry and fabless rivals, Arya wrote in a Dec. 7 research note. Upside from the IPO could prove Mobileye is well positioned to capitalize on demand for auto technology assets, while providing Intel with useful incremental cash, he added.
Intel is by far the largest of four security and anti-terrorism companies featured in my Dec. 7 column. All four security and anti-terrorism stocks to consider buying offer huge potential for protecting people and producing growth for investors.
The three other security and anti-terrorism stocks to consider buying have their best opportunities in front of them. A fifth company is privately held RADAR USA.
Each of the companies offers capabilities that are superior to what now is widely available to protect schools, military bases, airports, stadiums, arenas, theaters and places of worship. On the 80th anniversary of the Dec. 7 attack on Pearl Harbor in 1941, it served as a fitting time to remember the loss of 2,403 American lives when bombs and bullets targeted them from the air and the sea.
Is Intel a Comeback Candidate for Income Investors? A Big Need Exists in the Security Industry
The Nov. 30 killing of four students, and the wounding of six other teenagers and one teacher at Oxford High School in Michigan about 43 miles from Detroit and 33 miles from my hometown of Flint, serves as the latest example of a horrific yet preventable attack. If screening machines had been in place at the school’s entrance, the gun used in the attack by a student could have been detected and law enforcement could have been notified instantaneously.
One stock that has screening machines capable of not only detecting metal guns, but plastic improvised explosive devices (IEDs) and non-metallic, 3-D printed weapons is Liberty Defense (OTCQB: LDDFF, TSXV: SCAN, FRANKFURT: LD2), a public company that recently opened a new headquarters outside of Boston in Wilmington, Massachusetts. The company employs seasoned security engineers who left jobs at Leidos Holdings Inc. (NYSE: LDOS) and L3 Harris Technologies, Inc. (NYSE: LHX).
Engineers think everything through multiple times, so to see close to 10 of them come over is a very strong testament to the technologies and products under development, said Bill Frain, the chief executive officer of Liberty Defense. Their goal is to develop “game-changing” technology, he added.
Plus, 20 years has passed since the terrorist acts of 9/11 when 19 hijackers committed murder-suicide, killing 2,977 people and injuring more than 6,000 others. That day forever changed the role of security technology and revealed a critical need for innovation to thwart those who seek to harm others.
Is Intel a Comeback Candidate for Income Investors? Liberty Defense Is Showing Potential in Security and Anti-Terrorism Screening
Security companies need to stay “one step ahead” of emerging threats, Frain said. As a 30-year veteran in the security industry, Frain said he has been part of technological advances in detecting and preventing attacks.
Growth in the security industry shows no signs of slowing to safeguard against increasingly sophisticated weapons, Frain said. However, acts of domestic and international terrorism are continuing, along with violent crime, as gun purchases from a wide range of demographic groups are on the rise in the United States. Four in 10 adults reported that they live in a household with a gun and three in 10 indicated they personally own one, according to a June 2021 Pew Research Center survey.
Federal data show gun sales rising in recent years, particularly during the coronavirus pandemic. In 2020, the number of monthly federal background checks for gun purchases was consistently at least 20% higher than in the same month of 2019, according to the FBI’s National Instant Criminal Background Check System. The largest percentage-point difference occurred in July 2020, when about 3.6 million background checks were completed, up 44% compared to July 2019.
Is Intel a Comeback Candidate for Income Investors? Technology Is the Key
Demand is jumping for cutting-edge security detection technology that keeps people safe in their communities and when traveling by plane, ship or train. Liberty Defense is developing “leading-edge security” technology that includes its HEXWAVE body scanner to detect metallic and non-metallic concealed threats in buildings, as well as at indoor and outdoor events with high-volume screening.
Liberty Defense also is developing aviation security technology that includes the millimeter wave-based, High-Definition Advanced Imaging Technology body scanner and shoe screener licensed from a national laboratory and funded by the Department of Homeland Security.
The company has raised more than $11 million so far in 2021 and has another $500,000 is coming from a contract it received in October 2021 from the Transportation Security Administration (TSA). Even though Liberty Defense is in the pre-revenue stage, its leaders indicate the company is less than 12 months away from commercialization and the potential for a much higher valuation.
“Liberty Defense will be working closely with the TSA to provide overall screening effectiveness with security being the number one priority, but also improving the throughput for a practical and effective process,” Frain said.
Plus, Liberty Defense announced a beta testing agreement with the Maryland Stadium Authority that will cover the stadiums where the Baltimore Orioles play baseball and the Baltimore Ravens play football with seating capacity of 45,000 and 72,000, respectively.
One of Liberty Defense’s key vertical markets is sports and entertainment venues, so adding Baltimore’s Major League Baseball and National Football League stadiums to the company’s testing marks important progress, Frain said. Testing the system in sports complexes with thousands of fans will help to ensure the technology is aligned to meet market needs and is adjusted based on vital customer feedback, he added.
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Evolv Is One of Four Security and Anti-Terrorism Stocks to Consider Buying
A better-established comparable company to Liberty Defense is Waltham, Massachusetts-based Evolv Technology (NASDAQ: EVLV), which offers a walk-through portal and went public via a special purpose acquisition company (SPAC) this summer in a deal valued at $1.7 billion. Evolv Technology has approximately $15 million in annual sales. A key difference is that Evolv Technology is producing revenues but its screening machines only test for metallic objects, whereas Liberty Defense’s HEXWAVE tests for both metallic and non-metallic weapons.
Even though SPACs offer the opportunity to invest in early-stage companies that otherwise may be not available to public equity investors, the risks need to be well understood, said Ronald Esptein, an analyst with BofA Global Research.
“The SPAC financing process, in general, does not require the same level of due diligence that the traditional IPO process does,” Epstein said. “When considering such early-stage companies, quarterly earnings are essentially meaningless as most don’t have earnings at all.”
Ronald Epstein, BofA defense analyst. Image courtesy of Bank of America Global Research.
Nonetheless, Evolv Technology’s detection equipment can help secure large venues and companies. Its mission is to improve crowd security, as well as create a safer world to work, to learn and to play.
The company seeks to give sports fans, theme park visitors, concertgoers, shoppers, employees, students and others peace of mind to gather without fear of violence. Evolv Technology’s security screening has scanned 100 million-plus people, second only to the U.S. Department of Homeland Security’s Transportation Security Administration, using technology that combines advanced sensors with artificial intelligence (AI), security ecosystem integrations and venue analytics to detect threats 10 times faster than standard metal detectors.
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Is Intel a Comeback Candidate for Income Investors? Survey Shows Americans Worry About Gun Violence
Evolv commissioned Equation Research to conduct a survey, Guns in America: A Survey on Public Violence, Anxiety, and Threats, spanning Oct. 20-28, collecting responses from a broad distribution of 2,015 adults in the United States aged 18 and older. The survey found that 77.8% of the respondents answered that gun violence is a problem in America, while 44.9% reported feeling either extremely or moderately anxious about such gun violence.
At the types of locations where high-profile mass shootings have taken place, Americans report they now routinely check the exits and develop a mental plan in case a shooting occurs. Since mass casualty events have taken place in movie theaters, grocery stores and bars and nightclubs, some of the people who go to such venues understandably are taking precautions.
At a movie theater, such as in Aurora, Colorado, where a gunman in 2012 attacked and killed 12 people — the youngest a 6-year-old girl — and injured at least 70 others, 62.6% of the respondents said they check exits or develop a mental plan about how to respond if a shooting occurs. In addition, 28.6% of the moviegoers surveyed acknowledged either extreme or moderate anxiety. Plus, 15.3% of Americans responded that they feel they are at higher risk of encountering an active shooter based on their religious affiliation.
The United States is “awash in guns and gun violence,” with the American public filled with more anxiety than ever that is eroding any sense of trust that they are safe from harm, said Peter George, Evolv Technology’s chief executive officer. The survey indicated the most effective way to alleviate this “nationwide anxiety” is to democratize access to security for all public spaces, so people can feel confident when they gather and venues can take appropriate measures to keep people safe, he added.
Is Intel a Comeback Candidate for Income Investors? Watch Licensing Deals
“The licensing agreement with RADAR USA is a major step toward bringing effective and affordable security technology into U.S. and Canadian neighborhoods and making them safer,” said Jay Hutton, VSBLTY founder and chief executive officer, who also is the executive chairman of RADAR USA. “The collaborative security technology will allow private citizens and public safety entities to gain an improved view of their environments and better allocate resources.”
The agreement with VSBLTY gives RADAR USA an exclusive license to serve certain market segments in the United States and Canada that include Homeowners Associations, municipal governments and critical infrastructure. The pact provides VSBLTY with a pre-paid, non-refundable $2 million fee, payable upon achieving certain funding milestones.
RADAR APP has also entered into an agreement to grant RADAR USA an exclusive license to its software applications and related intellectual property on the same terms and compensation structure as provided to VSBLTY. RADAR APP is a collaborative security application that integrates citizens, local police and technology in a single platform, Hutton said.
Is Intel a Comeback Candidate for Income Investors? Complementary Capabilities
The technology’s interface connects street lighting, cameras and alarm systems, facilitating real-time interaction between people, police headquarters and patrol cars to prevent crime or quickly address any emergency. To that end, the RADAR APP network in Mexico has grown significantly in the last couple of years, said Hutton, who added that the technology application, powered by VSBLTY AI, is gearing up to show its potential in U.S. test markets.
VSBLTY aligned with RADAR APP and some key funding partners to pursue the U.S. market. The partnership allows VSBLTY to remain focused on its core security software development initiatives, Hutton said.
Certain VSBLTY executives and directors have participated in an initial arm’s length financing round for RADAR USA, described as the world’s first socially connected security network, Hutton told me in a Dec. 6 interview. But none of the management or directors of VSBLTY holds greater than a 1.04 percent interest in RADAR APP USA.
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Omicron and Delta Variants of COVID-19 Combine to Boost U.S. and Worldwide Case Numbers
COVID-19’s new Omicron variant and the highly transmissible Delta variant are combining to raise the level of worry and cases in the United States and other parts of the world. Public health experts and government leaders keep urging increased vaccinations and booster shots, as well as indoor mask wearing.
Data from the Centers for Disease Control and Prevention (CDC) show the variants are spurring a jump in the number of people receiving COVID-19 vaccinations. But roughly 62 million people in the United States remain eligible to be vaccinated but have not seized the opportunity yet, said Dr. Anthony Fauci, the chief White House medical adviser on COVID-19.
As of Dec. 10, 238,143,066 people, or 71.7% of the U.S. population, have received at least one dose of a COVID-19 vaccine, the CDC reported. The fully vaccinated population topped the 200 million mark this week by totaling 201,279,582 people, or 60.6%, of the people in the United States, according to the CDC.
COVID-19 deaths worldwide, as of Dec. 10, exceeded the 5.2-million mark, soaring to 5,294,069, according to Johns Hopkins University. Worldwide COVID-19 cases have zoomed past 269 million, reaching 269,021,697 on that date and adding almost 2 million cases since Dec. 7.
U.S. COVID-19 cases, as of Dec. 10, hit 49,788,804 and caused 796,349 deaths. America has the dreaded distinction as the nation with the most COVID-19 cases and deaths.
Is Intel a comeback candidate for income investors to consider buying? For those who can afford to take the risk, the reward after the company advances its move into areas of heightened future growth may prove worthwhile but the stock remains in the midst of a turnaround, so patience and strong stomachs should be considered prerequisites.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others. Call 202-677-4457 for multiple-book pricing.