Even the biggest, most successful companies have to adapt over the course of decades.
And that can be a huge opportunity for investors who buy shares at the beginning of a new growth phase.
That's the case with the tech stock we're bringing you today, which is one of the most recognizable brand names of the Information Age.
But it's a brand most people associate with desktop and laptop computers. Not with driverless cars.
That's about to change. Because beginning about five years ago, company executives decided to make a big shift in priorities.
The computer-based business didn't go anywhere: In fact, sales are still growing.
But the company has made a push into more ambitious markets, like data centers, cloud computing, and the Internet of Things.
And yes, driverless cars.
That's a market Allied Market Research projects to be worth $556.7 billion by 2026, up more than tenfold from this year. And this tech giant now stands to win a large share of that growth.
In fact, thanks to a key acquisition and heavy investment in research since 2017, this may now be the top driverless car stock in the market.
It's been able to leverage existing technologies in its portfolio - like semiconductor chips and wireless communication - to create turnkey driverless systems for automakers.
And while fully autonomous vehicles are not quite road-ready yet, this company is already producing autonomous features for cars currently in production.
If you're looking for another reason to buy, this stock also just got a top score from our Money Morning Stock VQScore™ system.
That tells us that if you wait until you see driverless cars everywhere you look, you'll have missed your best chance.
The time to buy this tech leader is right now...
This Tech Stock Sprinted into the Lead for Driverless Technology in Just a Few Short Years
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You can't talk about modern technology without talking about Intel Corp. (NASDAQ: INTC).
One of its founders, Robert Noyce, helped invent the integrated circuit, the microchip behind all our electronic gadgets today.
The other founder, Gordon Moore, gave his name to "Moore's Law," which any tech enthusiast knows as the observation that microchips are getting exponentially more complex over time.
For years, a central processing unit (CPU) designed by Intel was a mark of quality. And by 2007, Intel was the dominant supplier of processors for both Macs and PCs.
Perhaps the company was a victim of too much success. It's difficult to grow when you've already conquered that much of the market. So beginning five years ago, Intel executives decided to begin to diversify the business beyond its PC-oriented model.
That decision is paying off. Intel's PC-centric revenue is still growing: It was up 8.8% in 2018. But revenue for its new data-centric enterprises was up 17.4%, double the growth rate from the year before.
You can expect more double-digit growth in the next few years as Intel carves out strong positions in Big Data, cloud computing, and the Internet of Things.
But perhaps the most exciting - and lucrative - opportunity in the years ahead is in driverless vehicles. Intel made a big push into this space in 2017 with the $15.3 billion acquisition of Israeli vision-system specialist Mobileye.
It was an ideal marriage, allowing Intel to combine Mobileye's vision technology with its own sophisticated microchips and connectivity products.
In other words, Mobileye provides the eyes, and Intel provides the brains.
So it's not surprising that Intel has been able to leap-frog its way to the head of the self-driving pack in the past two years.
Even before the acquisition, Intel had partnered with Mobileye and BMW AG (OTCMKTS: BMWYY) to bring fully autonomous vehicles to market by 2021.
And in October, the company announced a partnership with Volkswagen AG (OTCMKTS: VWAPY) to launch a self-driving taxi service this year in Jerusalem (where Mobileye is based).
This fleet would install Intel's turnkey systems in existing Volkswagen vehicles, and it will operate on Level 4 autonomy. That means it's not quite fully autonomous, but the cars can operate without human drivers within certain parameters (like within a limited city grid).
What's important is that this is not meant to be a pilot program, but a fully functioning fleet. And it's part of Intel's commitment to being ambitious but also realistic. That means some of our ideas about what a car is are going to change.
Limits on where self-driving cars can travel, adjustments to standard car design (like eliminating steering wheels), and evolving ideas of car ownership (like keeping self-driving cars moving rather than letting them take up parking spaces) may all be part of the shifting transportation landscape over the next few years.
Intel has been at the forefront of the research into these more human questions, beyond just developing the hardware and software.
That's why it's going to be at the front of the pack when it comes to introducing this new kind of vehicle to the public.
And a quick look at the company's fundamentals tells us that the perfect time to buy this stock is right now...
Now Is the Time to Buy INTC
At a little over $50, Intel shares have been essentially flat in the last 12 months. That might be because investors are being cautious while the company reinvents itself.
But aside from INTC's potential in the years to come, investors have missed how much value the stock is already bringing to the table.
In spite of the restructuring, Intel's sales have risen every year since 2014, including by 13% in 2018. And net income more than doubled from $9.6 billion in 2017 to $21 billion in 2018.
Earnings per share (EPS) is projected to take a slight hit in 2019, according to FactSet, but that doesn't tell the whole story.
First, analysts have been consistently underestimating Intel during this transition phase. INTC has put together a string of 16 consecutive earnings beats. And in four of the eight quarters in 2017 and 2018, EPS was more than 20% better than the consensus expectation.
Second, EPS is still projected to bounce back in each of the following three years.
And third, Intel offers a dividend yield of 2.45%, nearly 50% better than the industry average.
To top it off, nearly every valuation metric suggests INTC is undervalued.
Its price/earnings ratio, both forward and trailing, come in at a discount between 20% and 30% compared to the industry average. So do the price-to-book, price-to-cash flow, and price-to-sales ratios.
So this is a stock that could hand you double-digit returns immediately - and then really explode once the self-driving vehicle revolution takes off.
That makes Intel a no-brainer to add to your portfolio today.
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.