Opinions
Lorne Steinberg
Cisco
CSCO-Q
PAST TOP PICK
Aug 08, 2016
Stock price when the opinion was issued
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Splunk acquisition in cybersecurity segment has secured a lot more recurring revenue for the company. Steady eddy. Keeps making good acquisitions and integrating. Good management, balance sheet, and dividend yield.
Not cheap anymore, so he sold on the valuation call. Nothing wrong with the business per se if you have a very long horizon.
King of the networking stocks. Hit their stride, mainly because of NVDA selling out of Blackwell and H20 and so on. Started beating on top and bottom, raising guidance (even during the tariff time). Pretty fully priced, with a $70.75 price target within 12 months.
Another play in Edge AI. Kinetic for Cities is an Edge AI that you can put on sensors around a city for water, traffic, air, everything. Poster child for this application is Singapore. King of routers and switches, but Edge AI will be very intriguing for them. His 12-month price target is $75.50. Yield is 2.44%.
(Analysts’ price target is $71.54)
(A Top Pick Oct 5/15. Up 18.57%.) He still loves this. Has $40 billion of net cash, and is throwing off $10 billion a year of free cash flow. They are buying back shares all the time and will probably be raising dividend by 10% a year for years to come. They are #1 in the world in their 4 major businesses, all of which are growth businesses. Still generating revenue growth, even with a strong US$, which is not an easy thing to do. Revenues per share is still rising. EPS is in the 7%-10% range for the next several years out. Have phenomenal franchises and are a free cash flow generator. Selling at a pretty cheap multiple, especially after Xing out the cash.