Cisco (CSCO)

Thinks the outlook is pretty good. Has positioned itself across many parts of the Internet of things and the whole wireless revolution. It is a big ship to turn around and get rapid earnings growth from. At its current price he thinks there are better places to be in tech. If you are holding it, it is going to do well. Pays a decent dividend.

(A Top Pick July 3/14. Up 15.76%.) His model price is $43.96, a 54% increase. A 3% dividend yield.

It is in a tech space that is booming. There is an enormous renewal process that is going on and has been since 2000 when the tech bubble broke. This one has nice upside potential.

John Chambers has moved up to the chairman’s position and is reinvigorating the new management team. This whole Internet of things just continues to grow exponentially, and this is one of the companies that makes the backbone for this whole phenomenon of communications as it is unfolding. Trading at about 13 X forward earnings. Strong balance sheet and they have been buying back stock. Dividend yield of 2.97%.

(A Top Pick April 23/14. Up 27.45%.) This has done well. It used to be a growth stock but is now a value stock. Has $30 billion in net cash. Still has the opportunity to grow its earnings in the high single digits. Consistent strong dividend growth. $7 billion a year in free cash flow. Good share buybacks. A lower risk, cheap stock.

His model price is $45.56, an upside of 53%. 3% dividend yield.

This is like the pipeline of the internet. You have the infrastructure as the backbone, increased wireless growth, and they got to build the routers, switches and systems for that transmission to take place. Technology is one of the better valued sectors, so you have great valuation and a super cash positioning, with a strong management team. The other side that is really positive is that you have software, (security and service) that is outpacing the traditional products growth. This will give more consistent revenue growth, margins could improve, and that improvement could ultimately come back to shareholders. Yield of 2.83%

(Market Call Minute.) This is coming up to some pretty stiff resistance at around $31. However, it has lots of upside potential if you look at the FMV.

CEO has just announced he is stepping down and moving up to Executive Chair. The company has been spinning its wheels for well over a decade. Revenue growth and earnings growth have been relatively flat. All that has changed over that time is the multiple. He keeps his eyes firmly on fundamentals, and when he looks at this company, he sees a struggle because a lot of their technology is no longer cutting edge.

It is a new position. He is staying in the tech space because the money flows in (from the commodity sector) are good. They have a fabulous balance sheet. It has room to grow at 10%. The PE is very low so the stock is not expensive. They have so much cash on the balance sheet they could go out and buy someone in a heartbeat.

(A Top Pick Feb 27/15. Down 2.86%.) Likes this and the story hasn’t changed. They are doing a lot of things well and they are in the right spaces. With the increased usage of smart phones, traffic data is going up, and with their network solutions they are helping manage that and keep carriers’ spectrum efficient. Also, well positioned to capitalize on this “Internet of things” that we keep hearing about. Also, remember cyber security and how much focus is on that. 2.9% dividend yield.

Seasonality is normally from October until January and then it kicks in again around now until May. This is okay for a seasonal trade. On a technical basis, you would like to see the stock flatten out, and if it got above its previous high, that would be a clear signal that the seasonal trade has clicked in.

The backbone of the internet. Their products can be replaced by new and better hardware. They will have more competitors than in the past as software can do a lot of what they do. It is a value trap.

Thinks the dividend is going to continue to increase. He likes the balance sheet. Really believes this whole Internet of things and connectivity in the global world we are moving into, is really a big deal. This company is at the centre of all this. Thinks it is going to be a big winner. The fair value is considerably higher than the current value and you are going to get paid twice what a 10 year treasury bond will give, while you wait.

It was his second largest position at 38 times earnings. They went to 200 times earnings and he sold and has not gone back in since because they are now a hardware based company and others can do what they do through software.