This Day On The Street
Continue to site
ADVERTISEMENT
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

Buy Cisco and Hewlett-Packard, Sell F5 and Riverbed

NEW YORK ( TheStreet) -- It seems networking giant Cisco (CSCO - Get Report) 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 - Get Report) 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 - Get Report) 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CSCO $28.30 -0.35%
FFIV $134.31 1.37%
HPQ $30.62 1.06%
RVBD $20.99 -0.05%
AAPL $122.37 -0.50%

Markets

Chart of I:DJI
DOW 17,745.98 -5.41 -0.03%
S&P 500 2,108.63 +0.06 0.00%
NASDAQ 5,128.7850 +17.0520 0.33%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs