That’s an edgy choice. Do you have anything that’s a little less risky?
There’s Cisco (CSCO), which I believe will be a beneficiary of the economic recovery and rebound in information technology spending and telecom carrier spending. Cisco is the largest provider of routers and switches to enterprises and large telecom carriers. They have four different businesses: routers, which are 17% of revenues; switches, about 30% of their sales; services business, which is 20% of sales; and advanced technologies, which make up 25% of sales. They also own Linksys and a services business. They are at the core of the technology revolution that’s still occurring. They will benefit from an increase in telecom carriers and enterprises spending on their networks, especially to accommodate more activity, more video, more video conferencing, even Twitter. It’s an economic recovery story. As video and entertainment delivery increases online, it forces carriers and enterprises to buy new routers and switches to allow more capacity for the additional data. Cisco also has one of the best management teams out there. They make strategically sound acquisitions to gain a foothold in new adjacent markets. They’re also focused on the consumer market, where they hope to have a presence in the home, as consumers create media hubs in living rooms. If you believe in more data over the Internet, Cisco is the play on that. My 18-month target price for Cisco is $30.
This article orignally appeared in the December 2009 issue of Black Enterprise.