Cisco (CSCO)

It is a big cap name. It is in favour this year, but he does not see the growth drivers so far. They are similar to IBM. There is no lever to move higher. If you hold it, then hold it for now.

Caught up in a big transitional situation in the technology industry. What used to be done mechanically, in terms of switching, is now being done with software. If you are the biggest manufacturer in electronic switches, how do you transition yourself into the new world without losing market share? It turns out to be more difficult than people thought. Even though they had a dominant position 10 years ago, it has been losing market share, and he thinks it is a really difficult period for the stock. He wouldn’t recommend it.

You are not buying this because it is cheap. There are so many companies transitioning from old archaic businesses to the Cloud business and this is doing that as well. The difference is that Cisco’s network switching business is still making them money. Any growth that you see on the Cloud business that Cisco creates, is above and beyond the growth that is already there with their meat and potatoes business. Dividend yield of 3.32%.

He owns this because it has a good yield and has lots of growth in it. Has a great cash position. Very well-run. The great thing with this is that you have to plug into Cisco in a lot of the technology that is going forward.

(Market Call Minute.) Just a little bit stodgy for him. The new CEO is impressive, but thinks there is a lot of legacy low volume commodity type business that is going to get in their way in terms of growth.

Making a significant shift over the last few years, moving more to cloud and software services. An impressive company financially. Good dividend growth (14% this year and at least 20% next year) and a 3.4% dividend yield.

Companies like this have hit a funk. Sales are not going anywhere, and there is always another surprise. But at the end of the day, they are generating tons of free cash flow, and trying to get their costs under control. He is not attracted to the name right now. The technology space is very hard.

(A Top Pick July 30/15. Up 12.99%.) This is like the pipeline of the Internet. It doesn’t matter whether it is wired or wireless, it is going to be good for business. They are moving from a hardware side to a services side, which gives them more recurring revenue.

Technology is an area that is attractive. This, like many technology companies is trading at a discount to its long-term average PE multiple. There are reports of potential layoffs across the board. Like many others in the technology space, they are making a transition from a hard over time. An interesting one to look at. ware based business to a software business, which is generally going to be higher margin with more recurring revenue. This has been trading at a relatively low PE multiple, and if they are able to make that transition successfully, he expects you could see a PE multiple expansion.

(Market Call Minute.) A good company. Thinks the job layoffs is a bunch of noise and they are actually investing and doing the right things. Slow growth and not that exciting.

(Market Call Minute) Tremendous opportunity in the cloud and the market continues to not give it price. It is frustrating. There are worse things out there.

(A Top Pick Aug 13/15. Up 11.25%.) They have shown that they have been able to be relevant with the software defined network coming out, as well as maintaining margins. They’ve taken costs out of the areas that are slowing, and put them into new growth areas. Valuations are still very attractive, and there is still room to run.

(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.

This was once considered old tech, but they seem to be really moving into the Cloud base quite successfully. A lot of their client base is using the Cisco platform to support them on the Cloud. He hasn’t owned this because of the sideways movement it has had for about the last 5 years. Dividend yield of 3.47%, which is attracting a lot of new buyers.

It is rare in technology that you are able to pick something up that is trading at 13X PE with a dividend yield of 3.48%. With people doing more and more on their mobile phones, data traffic has picked up considerably over the last decade, and he feels it is going to continue. This is a key player in helping cell phone providers stay mobile spectrum efficient. At the same time, the company has been going through a transition to get more involved into the Cloud side of things and to position themselves for the future.