Intel stock: These chips look mighty tasty

— -- Shares of AMD were rocketing, leaving Intel behind as AMD's lineup of microprocessors were well received by power users and trade press. But it didn't take long for Intel to get back on top.

Intel jettisoned several distracting side businesses and put its research muscle into developing the next generation of microprocessors. Now, the tide has turned, and Intel's technology is again leading the industry. Intel also strengthened its relationship with Apple, exposing it to one of the faster-growing PC makers.

All this hasn't been missed on Wall Street. Intel shares have fallen about 25% this year, along with the bulk of tech stocks, but they have held up better than some. Over the past 52 weeks, for instance, Intel shares are a bit better than flat, while AMD shares have fallen nearly 60%.

Do you take the recent weakness in Intel's shares as a chance to buy? To find out, let's put the stock through the four steps we examine:

Step 1: Risk vs. reward. When you take a risk on a stock, you want to make sure you're properly rewarded. Downloading Intel's trading history back to 1980, we see the company generated an average annual compound rate of return of 24.8%. That is a solid return and about 150% greater than the long-term average annual return of the Standard & Poor's 500 index.

To get that return, you accepted considerable risk — standard deviation of 51 percentage points. That's 162% greater than the S&P 500's long-term risk. That's tremendous risk, but you've gotten a fair return for the higher risk you've taken. So far, so good.

Step 2: Measure the stock's discounted cash flow. Some investors decide if a stock is pricey by comparing its current price to the present value of its expected cash flows. It's a complicated analysis made simple with a system from NewConstructs. When we run Intel's stock, we find it's rated "neutral." In other words, the current stock price is roughly equal to what the company is expected to generate in cash over it's lifetime. Using this analysis, it would appear Intel's stock is priced at fair value: not cheap, but not expensive either.