Cisco (CSCO)

(Top Pick Feb 21/13, Down 0.60%) Likes it a lot. Huge cash generation. Investing in growth areas and give back 50% of their cash flow to investors.

Carrying the legacy of a growth company in a new era. That new era is that it’s really a mature technology company in the likes of Microsoft or Hewlett-Packard. Earnings are growing at about 5%-7% so it shouldn’t command as high a multiple as it did. Have some headwinds in terms of the piece of its business that is allocated to government spending. Also, heavily linked to housing market and housing formation, which has been a bit of a headwind as well as an opportunity. Better places in the technology area to be.

Yield of 2.7% and trades at 10X earnings. Great balance sheet. Expect you will see better operating costs on their side and are coming out with new products that will really help the company. Expect margins will go higher over the next several quarters. Not expensive.

Different company than it was years ago. They are now in single digits in terms of earnings growth and revenues. Household formations have hurt them as they are involved with routers, etc. Also, do a lot of business with governments, which have been cutting back. Doesn’t think this is overpriced but doesn’t see any catalyst with this company. 2.6% yield.

(A Top Pick Feb 21/12. Up 3.23%.) Big cash pile and a growing dividend. Sees demand for bandwidth growing at an exponential rate. Tablet penetration is only 15% so there is huge growth in tablets. 2.7% yield.

(Top Pick Jan 11/13, Up 2.20%) Good balance between legacy systems and current. Acquisitions have been in the right space and they have been growing their service revenues.

(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.