Both Cisco and HP could do something like this while maintaining their single-digit growth performances. After all, they have the benefit of being in other businesses outside of F5's market.
So as promising as F5 appears today, could investors stomach declining margins for a stock trading at twice the forward price-to-earnings ratio of Cisco and four times that of HP? In other words, when considering F5 at current levels, investors have to decide does it present exceptional value or is it merely a growth risk?
One thing is certain: the company is just not going to suddenly stop growing. In assessing the company's investment worthiness, one has to start looking to where the market is heading -- particularly in areas such as cloud computing and virtualization -- areas where F5 has not only excelled, but has more than doubled its revenue over the past five years.
One of its underappreciated strengths is its high-tech multiprocessors that provide corporate IT services to companies. This helps IT departments use off-site data storage and also helps corporations exercise safety from the standpoint of data processing.There is also its lead in the core ADC market -- one where (according to Gartner) it has over 60% market share ahead of even Cisco. All of this indicates that expensive or not, this is a risk worth taking. At the time of publication, the author held no position in any of the stocks mentioned. Follow @rsaintvilus This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV