This Day On The Street
Continue to site
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

Cisco Joins List of 11 Buy-Rated Dow Stocks as Fundamentals Deteriorate

NEW YORK ( TheStreet) -- The U.S. stock markets have been trading under the cloud of a valuation warning for several months according to

Today we show that 76.2% of all stocks are overvalued 42.4% by 20% or more. 15 of 16 sectors are overvalued 13 by double-digit percentages, of which eight are overvalued by 21% to 30.9%. Sector price-to-earnings ratios have become elevated between readings of 17.2 to 29.9.

Stock market strength has been artificially propped up by the Federal Reserve's monetary policy of a 0% to 0.25% federal funds rate since Dec. 16, 2008, nearly five years ago. On Sept. 13, 2012 the Fed launched QE3, the purchase of $40 billion a month of agency mortgage-backed securities. On Dec. 12, 2012, the Fed added QE4, the purchase of $45 billion a month of longer maturity U.S. Treasury notes and bonds. These policies have failed and the stock market has become vulnerable to what I call 'QE-Fatigue'.

The purpose of quantitative easing was to lower mortgage rates, but instead the 30-Year fixed rate mortgage is more than 100 basis points higher than before QE3 and QE4 were implemented.
[Read: <a target="blank" data-add-tracking="true" href=""><em> Why Microsoft's Decision to Buy Nokia Is Bad</em></a>]

In my opinion the rise in rates caused the weakness in the homebuilder stocks since they peaked on May 20. Stock price weakness then spread to community banks which peaked on July 24. The Regional banks peaked shortly thereafter on August 1. There are no buy-rated homebuilders and there are no buy-rated regional banks according to ValuEngine.

This table shows my suggested sector weightings within an overall continued recommendation allocations to stocks cut to at least 50%, with 50% in cash equivalents.

When overweighting the sectors shown; computer and technology, consumer staples, multi-sector conglomerates, retail-wholesale and utilities I have been suggesting investments in the buy-rated stocks in the Dow Industrial Average.
[Read: <a target="blank" data-add-tracking="true" href=""><em> The Deal: Microsoft Spends $7.2B on Nokia Unit</em></a>]

Cisco Systems (CSCO - Get Report) ($23.31) has recently been upgraded to buy from hold after declining from a multi-year high at $26.48 on Aug. 13. Annual and semiannual value levels are $22.76 and $22.39 with quarterly and monthly risky levels at $24.44 and $25.66.
1 of 3

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CSCO $26.21 -0.87%
HD $134.67 -0.36%
INTC $29.90 0.17%
HPQ $11.45 -1.21%
IBM $146.47 1.54%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs