Cisco Systems Inc (CSCO) – Buy

Cisco (CSCO) dominates the enterprise routing and switching market. The switching costs to other competitors is high giving them a good wide moat for their business. Long term demand oulook looks great as internet usage growth continues.

Cisco has a large cash hoard and great cash flow to continue to capitalize on opportunities.

The biggest problem with Cisco is that they may be to aggressive for growth and may spend too much to acquire other businesses, enter businesses where they may not be able to compete or both, wasting their cash which may be better served continuing to strengthen the core competencies.

Cisco was recently punished for missing earnings and I think the selling has been overdone. Even if Cisco does waste some time and resources exploring or acquiring some new businesses, which reduced growth in income, Cisco would still be a decent value at the current price of $19.49 a share.

It’s a great opportunity to buy and get some shares before the market comes to their senses. I initiated a new position today.



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