Cisco (CSCO)

In the high technology area, the world is kind of migrating into the cloud, so he needed to find a high-tech company that has big exposure to cloud computing and that is also cheap. Lots of upside. The business is interesting and is growing. He also likes the exposure to the US. It is quite possible for the growth to start to accelerate and investor interest might start to accelerate also. Yield of 2.81%.

Corporations are full of cash and don’t need to build capacity, but are looking for productivity. One place where they are spending is technology. Technology is expanding very steadily and is one of the best performing groups in the market. This company is not a high growth company like it once was. Have a very strong balance sheet with very steady cash flow growth, buying back shares and increasing their dividend. Expects technology will have a pretty strong market heading into year-end. This would not be his #1 choice. He would prefer Microsoft (MSFT-Q) or Intel (INTC-Q), but you won’t get hurt here. (See Top Picks.)

Feels this is probably being driven more by the market, and less by company fundamentals. They were a high-growth, exciting, cutting-edge technology company 10 years or so ago, but have become a fairly old, staid, slow growth technology company. The 2014 revenues are below the 2013 revenues.

A mature technology company. In their end markets, spending is not as strong and somewhat moderating their CapX spending as their networks have primarily been built out. Also, they are seeing a lot of weakness in emerging markets. Restructuring and reducing their employment base by about 8000 jobs. Trading at a relatively low multiple of 11X forward earnings and gives a pretty attractive yield, but not a lot of earnings growth. New competitors are coming in, and they are losing share.

This is not the 15% earnings grower that it was. It is more of a 6%-8% earnings grower. However, they have $30 billion net of all debt which they are aggressively using to buy back shares and raise their healthy dividend of around 3%. They remain #1 in the world in their major industry sectors, which are growth sectors. He is looking for earnings to grow in a 6%-8% range in the next couple of years. If you want a conservative name, trading at a pretty low multiple, with a pristine balance sheet and growth, this is a good bet.

Hasn't owned this for 12 years. It is still very important to the global infrastructure of what goes on in technology. He doesn't think you will see PEI multiples expanding at any great clip in the space. He would rather be in a newer and fresher technology space.

They see slow spending from businesses. Likes what they are doing increasing dividend and buying back stock. He doesn’t like the price when he marries it with the growth potential. Wait for lower prices (teens).

It is old technology. They did most of their business in routers and switches. They now compete against entrenched companies, rather than start ups. They have lower growth metrics and so he would pass on it.

Has been a company that has woken up to the fact that they are no longer a growth company. They will grow in line with GDP growth. They transformed the business model to a slower growth model so more cash comes to the surface.

His model price is $37.35, a 40% upside. It is right at the bottom of one of EBV +3 one of his levels. Great support. Yield of 3.01%.

This was the Apple (AAPL-Q) in its day back in 2000 and is still below where it was. However, it is a really well run company and has loads of cash. Looks like demand on the front end is dropping off somewhat. This may be the time to move out of large-cap tech and move into something like the oils or something a little more defensive. 3% dividend return.

Some of the big technology names have done quite decently. This one has done OK. It’s up about 6.5%. Thinks they are still trying to find their way. He would probably look at more interesting names, whether in the semi-conductor space or the larger cap names. Earnings are OK, just not robust.

(Market Call Minute.) A slow growth business and not doing well on their main business of routers and switches.

(A Top Pick Aug 7/13. Down 3.59%.) Recently cut 6,000 jobs and, unfortunately, this is the way this company is going to grow. His model price is $37.33, a 52% premium. Yielding 3.1%. If this could go in any way, and it hasn’t done so for years, there could be tremendous upside.

Not bad at this price. Trading at 12X earnings. Great cash flow. You are looking at something like 5% growth. Has a cheap multiple because people were worried about new technologies coming in and replacing the bulk of their historic markets and switching to routing.