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David Zanoni
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David Zanoni is the owner of startbuildingit.com. He is a graduate of Rutgers University with a B.S. in Management. He is an independent long term investor of quality stocks and uses options for strategy. David believes in the power of innovation, capitalism, and the characteristics of the... More
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  • The Cisco Kid Still Is a Friend of Mine 0 comments
    Jun 7, 2009 10:23 AM

         With Tech as one of the sectors leading the recently rally in the markets along with the financials and commodities, Cisco (CSCO) has benefitted by moving up 43% from the March lows.  The stock is up 22% for the year with a PEG ratio of 1.58 and P/E of 15.90.  I would like to explain the reasons why that the uptrend will continue. 

         Their recent inclusion to the Dow Jones Index shows that they are a bellweather company and a major player in the market. This brutal recession is separating the men from the boys in the marketplace, with Cisco emerging as one of the men.   I consider Cisco one of the major forces in the Tech sector along with Apple, Google, Amazon, IBM, and Microsoft. 

         Cisco's core business of internet based networking products is being expanded to include: servers and smart grid information technology.  The server push can be considered risky at this point.  However, if implemented properly, I feel that Cisco can make the servers portion of their business a successful & profitable one.  Their move into smart grid technology is a more exciting story.   With Cisco's EnergyWise software, they will link the phones, computers, lighting, smart meters, and HVAC systems of commercial buildings together to run at peak efficiency saving businesses money and reducing overall energy consumption. Cisco's cash on hand is three times higher than their current debt which puts them in a great position to finance these new projects.

        Recommendation:  I feel that Cisco's stock can have a 5-10% correction at any time along with the entire market.  If you want to start a new position you could wait for that pullback and buy it at $17 - $18.  However, buying it at $19 or $20 will not be a bad investment for the long term ( 5- 10 years) either.

    Disclosure: Long Cisco

    Credits: Thank You to the popular band, WAR, for the title idea.

     

     

     

        

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