Cisco (CSCO)

This is an example of a fall from glory, even though in operational terms it has done really well and has grown. It is going to continue to grow because you will need it for the plumbing that sticks the Internet together. Now paying a decent dividend. Rock solid balance sheet. It is reasonable to assume that there will be continued growth.

$36.73 model price, 57% upside. 2.91% yield. He has recommended it in the past. These large cap stocks are stuck in the water but certainly this is worth holding.

(Top Pick Feb 21/13, Up 17.89%) Lots of cash flow from its legacy business. Targeting software services side of things. Management team is focused and committed to a share return program so 50% of free cash flow comes back to shareholders. She added more to her position following the last earnings call. Just announced layoffs.

(Market Call Minute.) Would hold this because of the growth in the global economy.

Analysts are starting to come around to where they are. About 10 times earnings. Making a lot of acquisitions to keep up. Not sure how sustainable this approach is. Good balance sheet, but it doesn’t look cheap. There are better places to be.

His 3 picks today are all technology related. He is seeing earnings and revenue growth over time and a global move towards more mobile telephony technology. This one makes a lot of backbone for that. Trading at a pretty reasonable multiple of around 13-14 times earnings and yielding 2.86%. Growing its dividend.

Basically the pipeline provider of web and infrastructure. Internet will grow more so on the mobile side and will need more backbone to fulfill faster speeds and more demand. This company provides that equipment. Strong management. Good dividend of 2.79%.

(Market Call Minute.) They are cutting jobs. The end use market is not picking up as quickly as they had thought.

His model price is $37.71, a 41% upside. These old technology names have a lot of value to them.

Company has struggled. Recently acquired a bunch of companies. Thinks they are refreshing their product line and there will be significant opportunity. Stock has broken out since the end of March in recognition of the improved earnings outlook. Thinks it will do well but feels there are other better risk-adjusted return possibilities in smaller companies.

Have done a fantastic job. Have a ton of cash on their balance sheet. They committed to returning 50% of free cash flow to investors in the last year. This has worked phenomenally well. Also, where they have spent the money, it has been on the software and service side, which is given them a great growth area. She has been trimming her position a little bit and investing in some names. However, it looks like this stock has quite a bit of momentum behind it.

Doesn’t own because he feels the stock has changed and the wrong management is running the company. Used to be a growth stock but the networking market has effectively slowed substantially and there is a very big competitor out of China.

They are doing well and have raised their dividend. Has a lot of cash on the balance sheet. Stock is doing really well. Technically it has broken above the 2010 high, which is a very positive sign. This would be one of the stocks you would want to be in the technology area. From his perspective, he would not be owning this right now as it is not in its seasonal period but a lot of people want a certain percentage in their portfolios into technology. If you did, this would be one of the preferred ones. Seasonality starts in October.

Good stock. Has had a pretty significant run for what it actually does. What has the potential to pressure the stock, which may give you a better entry point, is that it operates in a couple of big verticals 1) governments and 2) financials. Neither of these are spending any money these days. Until we see sustained IT spending coming back, there probably will not be material upside. Would prefer to see it in the $22 range.

(Market Call Minute.) The operating subs are doing well.