The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- It is not secret that I have been an unabashed cheerleader of networking giant Cisco ( CSCO) -- which by default would make me a so called "hater" of its chief rivals including Juniper ( JNPR), Riverbed ( RVBD) and to a lesser extent Hewlett-Packard ( HPQ). Who has ever heard of a Yankees fan that also roots for the Red Sox? It just doesn't make sense. But I have recently found myself secretly admiring the recent performance of one of Cisco's chief rivals in F5 Networks ( FFIV), a company that I continue to consider grossly expensive by many standards -- not the least of which stems from its P/E ratio of 42. Be that as it may, F5 continues to log quarterly performances that suggest that not only does it have its act together, but more importantly, it consistently demonstrates to investors that it has no problem growing into its valuation -- and its recent earnings announcement further affirms to the market that (just maybe) its growth expectations have not reached the level of "too high" as currently perceived. The quarter that was
One of the company's strengths and one that I consider grossly underappreciated happen to be its high-tech multiprocessors that provide corporate IT services to companies while not only helping IT departments use off-site data storage but also helping corporations exercise safety from the standpoint of data processing. There is also F5's lead in the core ADC market -- one where (according to Gartner) it has over 60% market share ahead of even Cisco. The company also continues to position itself for mobility by
its recent acquisition of Traffix , a firm that specializes in 4G Diameter signaling products for telecommunications service providers. This acquisition presents new growth opportunities for F5 -- particularly in the mobile market as well as offering the company the ability to leverage and further its cloud packet-guiding strategies. What is clear is that not only does the company understand what the market is expecting in terms of growth, but also it has developed a comprehensible blueprint of how to get there. Bottom line I have to say that I was broadly pleased with the company's performance and from this point forward, I will no longer be just a closet admirer of one of the best stories on the market. As competitors such as Cisco and Hewlett-Packard continue to rebound from a disappointing 2011, I would think that this will only add increasing pressure to F5 to continue to perform. And I think the company understands this by having issued Q3 guidance that arrived slightly below pre-existing estimates. As enamored as I have now become with its performance, I still can't see myself biting at $131 price tag with a multiple of 42. That said, for risk-tolerant investors willing to be patient, there may be 15% more upside to the shares -- putting it at $150. But for value investors I would look to names like HP and Cisco -- although not as dynamic, they do offer some safety while providing decent dividends yields.