Turn to the 'Cisco Kid' to Win Today's Political Battles

The uncertainties that resulted in Tuesday's flat close continue to hang over Wednesday's trading. Below, we look at a technology stock that should not only remain immune to these factors, but also thrive.

Chief among investor anxieties is the meeting this week in Florida between President Trump and Chinese President Xi Jinping. The China-bashing and mercurial American president is a wild card in these face-to-face confabs with world leaders; a misstatement or misstep could send markets tumbling.

Exacerbating the geopolitical uncertainty is heightened tensions with North Korea, the unfathomable totalitarian state that seems determined to get its hands on a nuclear weapon. And yet, economic growth remains on track and Wall Street still holds hope (albeit diminished) that a floundering Trump will somehow make good on his major campaign promises.

Until these unknowns are settled, neither bulls nor bears are likely to get the upper hand in the stock market.

One trend appears resilient, though: the accelerating momentum of the technology sector. The S&P 500 (SPY) benchmark index enjoyed a healthy first quarter, gaining 5.5%, which was exceeded by an even stronger performance by the Nasdaq, which gained nearly 10% in the quarter.

Tech stocks are on the upswing in large part because of increased IT spending among corporate clients and the prospect of lower taxes under Trump. Here's a solid tech stock that should continue to do well in 2017 and beyond: Cisco Systems (CSCO) .

Cisco is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells CSCO? Learn more now.

With a market cap of $167.31 billion, Cisco is one of the biggest suppliers of Internet-based networking products; the company's routers and switches are pervasive in offices, classrooms and government offices around the globe.

Cisco may be on the conservative side as a technology stock, but amid the volatility of the Trump regime, that's a good thing. The company sits on a huge cash hoard of $71.85 billion and controls proprietary technology that's increasingly sought by consumers and businesses around the world.

Lots of cash on hand provides Cisco with a cushion for the market downturn many analysts see ahead. It also allows the company to make the consistently strong R&D spending that's necessary to maintain its competitive edge. If Trump makes good on his promise to allow tech companies to repatriate overseas cash for a lower domestic tax rate, you'll see Cisco embark on a spurt of R&D and acquisitions.

Cisco will continue to benefit from the accelerating trend of around-the-clock global connectivity. Moreover, as the leading player in cyber security, Cisco is in the best position to profit from growing concerns about international hacking.

Attacks allegedly emanating from Russian President Vladimir Putin's army of hackers have placed cyber security on the political front burner, indicating continued robust demand for the company's security products.

Cisco stock trades at a trailing 12-month price-to-earnings ratio of 17.2, a bargain compared to the trailing P/E of major rivals Oracle (ORCL) (21) and Microsoft (MSFT) (30.9), as well as its industry (24.7).

The average analyst expectation is that Cisco's year-over-year earnings growth will reach 4.6% next year, and 10.04% over the next five years (on an annualized basis).

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John Persinos is an analyst with Investing Daily. At the time of publication, he owned stock in Cisco and Oracle.

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