NEW YORK ( TheStreet) -- During the week of May 13, Applied Materials (AMAT - Get Report), Brocade ( BRCD ) and Cisco (CSCO - Get Report) report. All three are dividend payers, they each possess market-moving potential, but not all three are buys. In a high-unemployment economy, Cisco continues to benefit from business' investment in efficiency. Applied Materials struggles under the weight of cheap energy. Analysts expect little change in Brocade's year-over-year results.
Don't forget that as the reporting date nears, option premium typically increases, making it difficult to profit from buying options. Instead, look to sell premium through covered calls and credit spreads. All else being equal, credit spreads can provide hedging opportunities while also allowing investors to benefit from the increased option premium.
(CSCO - Get Report)
designs, manufactures and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industries worldwide.
$14.96 to $21.98
Cisco Systems is anticipated to report modest third-quarter earnings after the market closes on May 15.
The consensus estimate is currently 49 cents a share, an improvement of 1 cent (2%) from 48 cents during the same period last year. Estimates from analysts range from a low of 48 cents up to the highest estimate of 51 cents per share.
I believe Cisco will report slightly above the estimate with at least 50 cents per share. While the market estimate is 49 cents, if Cisco doesn't beat, anticipate initial price weakness absent impressive forward guidance.
Cisco's shares made an impressive run during the last 52 weeks, gaining over 5%. Analysts are calling for at least another 10% increase with a target price of $23.53. A strong earnings report is exactly what Cisco needs to push through to the next price level.
Cisco is a mixed bag on the chart. From a technical analysis perspective, the stock is driving down the middle of the road without a clear direction. The weekly chart is slightly bullish, with shares trading above the 200-period moving average. However, the fast moving averages are feeble, and the current price is below the short-term, technically important, nine-period moving average.
CSCO Revenue Quarterly