NEW YORK (TheStreet) -- With what appears to be a recent uptick in corporate earnings, I'm starting to suspect that not only are enterprise IT expenditures starting to return but overall capital re-investments may continue to be better than previously anticipated.
It stands to reason that as corporations strive to grow, enterprises must scale accordingly -- adding increased pressure on existing infrastructures to support increased network demand.
For this reason (among others) I think it is prudent for investors to start positioning themselves for a prolonged recovery in the tech sector, particularly the networking companies such as routing and switching giants Cisco (CSCO) and Hewlett-Packard (HPQ).
While these two might be in a better position from the rest of the group, there are also plenty of growth opportunities in F5 (FFIV) and Brocade (BRCD), which can spell potential hazards for Juniper (JNPR).Leading off, it's getting progressively more difficult not to like Cisco's current value. As enamored as I might be for the overall sector, the fact of the matter is, there is Cisco and then there is everyone else. This will not change. There is no other company that dominates corporate backbones in the manner of Cisco gear. Not only does Cisco currently power over half the Internet, but it is yet on the verge of robust growth. Nonetheless, investors continue to ignore the good - particularly from the standpoint of earnings. In its fiscal fourth quarter, Cisco earned of $1.9 billion, or 36 cents per share -- representing an increase of 56% from the same period of a year ago. The better-than-expected results were largely attributable to growth in North America, in particular the U.S. as sales grew 7%. Yet, it gets beaten up on Wall Street for not providing growth in sufficient quantities. What's more, this was the company's sixth consecutive quarter where it has logged a beat on both top and bottom lines. With the stock now trading at just under $20 per share and a modest P/E of 12, value investors would be wise to jump on Cisco as there may not be a better entry point. Interestingly, as with Cisco, rival Hewlett-Packard suffers from much of the same lack of growth expectations. But investors need to ask themselves, if not now, when?
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