This Stock Could Be the Turnaround Play of 2021

The semiconductor shortage is probably going to get worse before it gets any better. Intel Corp.'s (NASDAQ: INTC) new CEO Pat Gelsinger told Yahoo Finance Live that he expects it to be "a couple of years" before the shortage improves.

Meanwhile, the demand for semiconductors and computing equipment, everything from laptops to home PCs to car components, just keeps on growing. The coronavirus pandemic hasn't done anything to dampen demand - if anything, it's mostly responsible for the increase. Intel's Gelsinger himself points to the world's increasing "digitalization," and it's tough to argue with that.

The thing is, Intel has an airtight plan to leverage the semiconductor supply crisis and take back its once-commanding position in the market. Like we've seen over practically the entire history of money, anytime demand swamps supply, the supplier rakes it in hand over fist.

I think the plan is going to do wonders for Intel's stock, making it a rare long-term hold recommendation from me. Let me walk you through it...

Great Turnarounds Can Bring Incredible Profits

A CEO shakeup at a shaky company at the right time can be just what the doctor ordered. The last couple of decades are full of stories like that. Sometimes they're visionaries, others have "no-B.S. attitudes," other times they have a downright eerie feel for profitable trends, and sometimes it's all of the above - all sorts of talents and skills.

Satya Nadella, Jim Cantalupo, Lee Iacocca, Steve Jobs - all of these CEOs took companies that were on the rocks and turned things around.

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Just so we're clear, by "turned things around," I mean "handed stockholders buckets of cash."

I think Intel is ripe for this kind of change - a classic turnaround target. Gelsinger seems to have the makings of a "turnaround artist."

See, I see Intel as being in a similar boat to Microsoft Corp. (NASDAQ: MSFT) back in the early 2010s. Microsoft had been the 800-lb. gorilla of software for more than a decade at that point, but it got a little too comfy, and by the turn of the 2010s, it was just treading water. It looked like the glory days were long gone.

Satya Nadella took over as CEO in 2014, when MSFT was trading at $38 or so, and very long story short, Nadella executed a turnaround vision and plan that sent the stock up $515 and landed the company in the ultra-exclusive "trillion-dollar club" along the way.

Not all that long ago, Intel was the name in semiconductors. It was one of the world's most innovative chip makers; it gave the world the x86 series of microprocessors that brought computers into millions of homes across America. "Intel Inside" was its slogan, and for a good reason.

Intel's About to Turn a Profitable New Page

The company has really faded into the background. It's still the world's biggest semiconductor manufacturer by revenue - it booked nearly $77 billion in revenue in 2020 - but it's ceded the "most innovative" title.

Intel has experienced major delays in the production of next-generation 7-nanometer chips. This has allowed its competitors like Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM) and Samsung Electronics Co. Ltd. to pull ahead and take control of the market.

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And production isn't the only place where Intel looks rusty.

INTC shares have packed on 19% in gains over the last two years. Not bad, right? You have to compare that to the growth of the PHLX Semiconductor Index... which has grown 114% over the same time frame.

You read that right: Intel's gone from leading to lagging the entire sector six to one!

Seems like that's a hell of a lot more than Pat Gelsinger can stand.

He's been CEO for barely two months, but he's laid out some important, frankly audacious initiatives that look set to put "Intel Inside" back on the map. Not only that, but they'll go a long way toward relieving our dependence on foreign semiconductors - that's a serious national security concern that's getting more serious by the day.

Intel is investing $20 billion to build two semiconductor factories, or "fabs," in Arizona. That figure represents roughly 86% of Intel's cash on hand in 2020, but it's important to remember that figure itself represents an 82% year-over-year increase from 2019. If demand holds - and, in the middle of a tight global supply crunch, it will hold - it's a smart outlay that'll probably pay for itself quickly. And with interest rates being what they are, it's not a stretch to imagine Intel will finance a lot of that spend on the cheap.

And remember: Congress and the Biden Administration are working out a $37 billion package to bolster domestic semiconductor production and "re-shore" a sector that's been radically offshored for years now. The Arizona facilities will create jobs for Americans, to boot. For his part, Gelsinger is fired up about the potential shot in the arm, saying it's a "major statement" from the administration.

Ultimately, it's never too late for a comeback, and Intel has a beautiful shot all lined up. For Intel, it's all upside from here - buy at these levels, and watch the profits roll in for years to come.

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