Cisco Systems ( CSCO ) will release its fiscal first-quarter results November 14. The company will report after the market close, with the consensus calling for earnings of $0.72 per share, up from $0.61 during the same period last year. CSCO has appreciated 21.5% year to date.
CSCO was recently trading at $47.06 down $2.41 from its 12-month high and $13.39 above its 12-month low. InvestorsObserver's Stock Score Report gives CSCO a 94 long-term technical score and a 94 short-term technical score. The stock has recent support above $44 and recent resistance below $49. Of the 20 analysts who cover the stock 15 rate it Strong Buy, 3 rate it Buy, 2 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, CSCO gets a score of 81 from InvestorsObserver's Stock Score Report.
Cisco has a fantastic earnings track record and has posted better than expected earnings and sales each of the last three quarters. The street expects Cisco to post a $0.02 earnings beat with a whisper number of $0.74 for the quarter. The stock sold off a bit with the overall market in October, but as the overall market has improved CSCO has already erased most of its recent losses and is approaching its 52-week high set in early October. Analysts remain upbeat on the stock with the company expected to grow earnings by 15% for the full year, and by an average annual rate of 9% over the next five years. The entire tech sector has been hot, and while CSCO has managed to gain just over 21% during the year the stock remains at a reasonable price with a forward P/E of just 14.3. The current valuation definitely allows for CSCO shares to make gains on a better than expected quarterly report, and the 20 analysts who cover the stock have an average price target of $51.88. CSCO is currently trading at $47.06.
Stock Only Trade
If you're looking to establish a long stock position in CSCO consider buying the stock under $47. Sell if it falls below $43.50 or take profits if it gets to $54.
If you want a bullish hedged trade on the stock, consider a 12/21/18 38/43 bull-put credit spread for a $0.40 credit. That's a potential 8.7% return (76% annualized*) and the stock would have to fall 9.5% to cause a problem.
There are not bearish hedged trades we like at this time.
Covered Call Trade
If you like the stock but wish to lower your cost basis on a new position, you may want to consider a 12/21/18 $48 covered call. Buy CSCO shares (typically 100 shares, scale as appropriate), while selling the 12/21/18 $48 call for a debit of $45.56, per share. The trade has a target assigned return of 5.4%, and a target annualized return of 46.5% (for comparison purposes only).