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The market has been making a comeback in recent weeks, and
Cisco Systems, Inc.
) is no exception. Since the beginning of February, shares of
CSCO stock have gained almost 20%, dramatically outperforming the
's 3% climb.
That run only leaves
flat over the last year, though, showing just how tough things
have been for the networking giant. But I still believe CSCO
stock is a very strong stock investment after this red-hot run,
for a few key reasons.
From a big picture perspective, Cisco plays an important role
in three tech mega-trends: Big Data, cloud computing and the
Internet of Things. To that end, Cisco has seen strong growth
over the last five years in its data center products, which
underscore such trends. Plus, Cisco made several strategic
acquisitions related to security, mobility and the cloud in
All of these moves position Cisco stock for substantial
In addition to having a hand in cutting-edge areas, Cisco
remains the most dominant player in networking equipment with its
suite of switching and routing products, collaboration products,
video gear, Wi-Fi solutions and more. That offers stability from
a business perspective.
RBC Capital Markets agrees
; the firm just put out an "outperform" rating for Cisco stock,
citing high demand for the sector (and for networking in
particular) and adding:
10 Cinderella Stocks to Buy for 2016
"Cisco remains a serial acquirer for equipment-related
companies and is well positioned to continue diversifying its
revenue streams into Internet of Things (IOT), Software Defined
Networking (SDN) and Network Function Virtualization (NFV)."
Why CSCO Stock Has the Edge
But there's even better news.
Cisco is a poster child for stability from an investment
perspective too. The company has been controlling costs, upping
its dividend dramatically, buying back shares and building up its
balance sheet over last several years. When markets are volatile,
rock-solid fundamentals - as are on display with Cisco stock -
are particularly crucial.
In fact, Cisco jumped most recently after a solid earnings
report that came with yet another dividend hike. The company
posted better-than-expected results on the top and bottom lines,
gave guidance that was better than Wall Street hoped for sales
and in-line for earnings and increased its dividend
payout by a sweet 24%. The quarterly payout is now 26 cents per
share, which translates to a yield of 3.7%, even after the recent
Add it up.
Given its size, financial strength and continued investments
in new technologies, I expect Cisco will remain a dominant force
in the networking industry, even with any increased competition.
As a result, I expect investors to continue being hungry for
shares, especially when you consider that stability is so hard to
find in today's market.
Hilary Kramer is the editor of
Breakout Stocks Under $10
High Octane Trader
Absolute Capital Return
. She is an accomplished investment specialist and market
strategist with more than 25 years of experience in portfolio
management, equity research, trading, and risk management. She
has extensive expertise in global financial management, asset
allocation, investment banking and private equity ventures, and
is regularly sought after to provide her analysis on Bloomberg,
CNBC, Fox Business Network and other media.
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Can Cisco Systems, Inc. (CSCO) Stock Keep Running
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