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By Jason Stipp | 12-20-2012 04:00 PM

4 Stocks to Watch in 2013

Several names have great dividend-growth potential, while industry tailwinds will be a boon for another, according to Sanibel Captiva's Pat Dorsey.

Jason Stipp: I'm Jason Stipp for Morningstar. After solid performance in the markets for most of 2012, what opportunities are left for investors. Here to offer his take is Pat Dorsey, president of Sanibel Captiva Investment Advisers. Thanks for joining me, Pat.

Pat Dorsey: Anytime, Jason.

Stipp: Yeah, four names for us today, some interesting stories here. The first one is in the tech industry, Intel. I feel like the conventional wisdom on this company is that they're behind the trend on mobile. They are in a secular decline. There's also some cyclical issues going on. But you say it's a buy right now?

Dorsey: Yes. Certainly they have not had the success in mobile one would have hoped. These lower-power chips and designs from ARM Holdings really have stolen the lion's share of that market. And Intel has been just behind the curve in getting kind of a low-power mobile chip out there. But what you need to remember is that of course all these mobile devices we use, they use processing power that's based somewhere else, in a giant data center somewhere, and Intel has a pretty good chunk of the server market.

So, granted, it's not good that they are behind their mobile curve, but their data-center business is about 25% of operating profits. That's growing at a much, much faster clip, at a midteens level, maybe low-teens, relative to the PC business, which is probably more of 5% growth longer term because PCs are getting replaced by tablets and are really a pretty moribund market in developed markets. But PCs are still growing in a decent clip in emerging markets, and Intel of course has a very good record of capital allocation.

They recently borrowed about $6 billion at a 2.5% [interest rate] and their stock is yielding 4.5%, which is a good decision for a CFO in my book. And so you've got a 4.5% yield that probably can grow at 7%-8% and really one of the widest moats in technology. So, from our perspective we think that's a pretty good equity income holding.

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