This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Buy Cisco and Hewlett-Packard, Sell F5 and Riverbed

Stocks in this article: CSCO HPQ FFIV RVBD

NEW YORK ( TheStreet) -- It seems networking giant Cisco (CSCO) continues to move in the right direction. But it must still convince a market that rarely forgives and never forgets that it still deserves to be discussed as one that can deliver market-beating performance on a consistent basis.

On Wednesday, it will have another chance when it releases its fourth-quarter earnings results after the market close. Analysts are expecting net income of 41 cents per share on revenue of $11.62 billion, an increase from the 35 cents (or 17%) earned the previous year. For the fiscal year analysts are expecting $1.63 in earnings on $45.98 billion in revenue.

There aren't many companies outside of Apple (AAPL) with the same string of recent performances as Cisco. In fact, over the past four quarters the company has demonstrated consistent revenue growth averaging over 6% while averaging 5% growth in net income during that span.

For these reasons, I would be a buyer of the stock ahead of its report and sell two of its rivals, F5 (FFIV) and Riverbed (RVBD).

When looking at F5, I see a company executing as well as it can, but the stock remains grossly expensive. From the standpoint of value and the fact that earlier this year the company climbed 23% on the year, it is hard to ignore the reality that investors might have already missed the boat.

What's more, after its most recent earnings report (where it produced decent numbers), management issued guidance suggesting headwinds will likely be more harsh than previously anticipated. In the meantime, competitors such as Cisco and Hewlett-Packard (HPQ) are executing to perfection. It would seem this will only add increasing pressure to F5 to continue to perform.

I think for F5 this was the chief reason (among others) why the company issued less-than-favorable guidance, which resulted in a severe punishment of the stock to the extent that it dropped over 13%. (It has slightly recovered since then.)

My bearishness for Riverbed is for similar reasons. However, it is not executing as well as F5, which prompted me to call it one of the best shorts on the market as the stock was (then) trading at $20.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs