Wednesday, 29 December 2010
Cisco Shares Shift into Rally Mode
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Cisco Systems (CSCO) has been in rally mode the last two days primarily because investors are now seeing that Cisco is a good company that hit a rough patch. Two weeks ago, you didn’t say the word Cisco, as it was neglected after its poor earnings announcement and essentially dropped 20%.
The tide turned as Cisco made Barron’s “Top Buy” list. The stock has been rallying the last two days because of the Barron’s announcement. Barron’s reasoning behind the top pick was primarily the fact that Cisco is undervalued compared to its competitors and, even though there isn’t as great of a growth story, Cisco certainly has a high value. With this news, institutional investors and average joe investors began snatching up shares and Cisco has been riding the rally wave.
Cisco was up about 3% yesterday and so far today, up 1.5%. The stock currently trades at $20.48 and there is no doubt more room to run. The stock is no doubt trading at a discount with its trailing P/E at 15, PEG at 1.02, and its Price/Cash Flow at 11.10 (compared to an industry average of 12.29).
It should also be mentioned that Cisco has released a press announcement to expect a dividend in 2011. It is relatively unknown how much or when. Although there is talk that the dividend will pay out in July.
Although Cisco is undervalued, I wouldn’t be a buyer at this moment. The stock itself has been in a rally and the market’s bullish sentiment is reaching historic highs. This could be the signal for a top in the market and we could be seeing a sell-off in January. If you have patience, Cisco would be a great addition to your portfolio.
Disclosure: I am long CSCO.
The tide turned as Cisco made Barron’s “Top Buy” list. The stock has been rallying the last two days because of the Barron’s announcement. Barron’s reasoning behind the top pick was primarily the fact that Cisco is undervalued compared to its competitors and, even though there isn’t as great of a growth story, Cisco certainly has a high value. With this news, institutional investors and average joe investors began snatching up shares and Cisco has been riding the rally wave.
Cisco was up about 3% yesterday and so far today, up 1.5%. The stock currently trades at $20.48 and there is no doubt more room to run. The stock is no doubt trading at a discount with its trailing P/E at 15, PEG at 1.02, and its Price/Cash Flow at 11.10 (compared to an industry average of 12.29).
It should also be mentioned that Cisco has released a press announcement to expect a dividend in 2011. It is relatively unknown how much or when. Although there is talk that the dividend will pay out in July.
Although Cisco is undervalued, I wouldn’t be a buyer at this moment. The stock itself has been in a rally and the market’s bullish sentiment is reaching historic highs. This could be the signal for a top in the market and we could be seeing a sell-off in January. If you have patience, Cisco would be a great addition to your portfolio.
Disclosure: I am long CSCO.
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