Cisco (CSCO)

CSCO vs. IBM Missed the boat on cloud, not a great growth rate. Revenue's down. Nice dividend. Doesn't love it, not buying it. For dividends, likes IBM better as its risk/reward is better.

They may not do well in the work-at-home space. This space demands more and more bandwidth and dispersion is greater. Cisco Webex is a competitor to Microsoft Teams. The average ticket for their product is very high and board members are reticent of spending. Once we see more clarity for after the pandemic, it will do well. He believes in the leadership team.

CSCO vs. ZM Zoom is one of the most expensive stocks at price to revenue, so this is a red flag. Gives him pause. How much future success is already built into the price? An alternative is Cisco, with their add-on to access what Zoom does. CSCO is stable, with a reasonable valuation. Companies eventually will need to invest in switching and routers, and this will come straight Cisco's way.

(A Top Pick Aug 22/19, Down 10%) Their product that competes with Zoom has done well. The rest of the business is shaky. It's a timing issue. Well positioned for the next 10 years. Not expensive. He'd be a buyer and a holder.

Recent earnings beat, but the market didn't like it. COVID is hurting them. Their business is focus on on-premise tech while peers are the cloud operators. Cisco is migrating to the cloud late. 14x earnings with a nice dividend, which is enticing, but can they make their growth rate? The risk-reward isn't here. This could turn into an IBM and could take years to turn this ship around. This could be a value trap.