Cisco (CSCO)

(A Top Pick Feb 9/12. Up 4.86%.)

Have to do the same kind of transition that IBM did, which means turning into a low value and low growth stock with dividends and share buybacks. Has come off the back of substantial growth over many, many years. Thinks the process is underway, but wonders if the CEO is the man to do that transition. Maybe they should get rid of a few of their product lines.

The giant in the whole networking space. Really feel it when the economy slows. Reporting tomorrow and she would wait to hear their results. Trading at a pretty low multiple and have lots of cash. If the global recovery is underway, you could see some spending.

This company is driven by the overall economy and he has seen some issues with demand coming into the 4^th quarter with enterprises not willing to open up their pockets. It is going to be difficult, but there is pent-up demand for spending and that is starting to be released. Has pressure from a number of companies, especially Asian, moving into the low end switch business. Offsetting this is some success on the routing side. Not a major growth stock. Not super keen on this one.

Stock is cheap at 10.7X PE multiple but analysts are forecasting glacial growth of 4% for 2013. They are trying to reinvent themselves. A lot of their products are under intense competitive scrutiny. 2.7% dividend is sustainable but he isn’t looking for any big increase.

(Top Pick Jan 2/12, Up 11.04%)

(Market Call Minute.) Likes this. Cheap technology company. Trading at under 10X earnings. Good dividend yield and shareholder friendly management.

It has been tough. Management lost credibility. But the stock is cheap and tech infrastructure is rebounding. The rollout of LTE and need for greater bandwidth will drive them. CSCO allows telcos to take their time in filling up bandwidth. He ignores the street right now.

Big tuck-in acquisition company but not all have worked out. Goodwill is an issue but they have mountains of cash and has recently started talking about returning capital to shareholders. You need to think about whether or not they can make the transition that ultimately IBM has done, high growth company into a company that has dividend growth profiles and a total return focus. He is staying away.

Slowed in its growth rate, but trades at a very reasonable multiple. You try to buy it a little bit lower. Buy under $20 as we approach the debt ceiling talks next month.

(A Top Pick Jan 26/12. Up 8.29%.) Sold his holdings when he rotated into Google (GOOG-Q). Earnings were not as impressive as he had hoped.

A lot of cash generation and free cash flow yield is very strong. Very strong balance sheet. Committed last year to a 50% return of free cash flow to investors. Likes companies that still have room to grow the dividend. Good balance between a very cash flow steady Eddie business on one side and newer businesses, which, last year 40% of them grew revenues at better than a 10% pace. Yield of 2.74%.

(Top Pick Jan 6/12, Up 5.42%) Still likes it. It is trying to break out.

Even though it has been very successful in selling its routers and making money, the long-term chart over the last 5 years is down even though you are up 5% in the last year. If US corporations are willing to start investing in capital equipment, then this is due for a run.

Sold his holdings about a year ago because growth prospects weren’t what he hoped for. IT space has been fairly challenging from a number of different perspectives. Have done a couple of really good things recently including instituting a dividend which they could grow over time. Without a real robust economic environment, all of the IT companies face a bit of a headwind.