With so many investors focusing their attention on tech companies oriented toward secular trends such as the boom in EV and other technologies with strong secular growth underpinning long-term growth prospects, adding a company like Cisco Systems Inc. (NASDAQ:CSCO) could prove to be a solid contrarian strategy right now. Unlike its tech peers operating in such high-growth sectors, Cisco’s valuation is relatively muted right now.
That’s not to say Cisco doesn’t have its own strong secular growth trends underpinning its business. Quite the contrary, actually. Cisco is a networking equipment mega-giant, providing software and services in addition to key hardware components supporting the growth of 5G and data center connectivity. This is a company that provides investors with a picks and shovels approach to these secular trends, rather than direct exposure. This factor has played substantially into the company’s relatively low valuation multiple compared to its peers.
I think the long-term runway for growth for Cisco remains robust, and is likely to support long-term double-digit total returns for investors for decades to come. Yes, this is a legacy player in the tech space. However, this is also a company with established cash flows and real profits. Cisco has returned a tremendous amount of value to shareholders over the years in the form of dividend distributions as well as share buybacks. A current yield of 3.1% is meaningful and ought to be considered by long-term investors seeking total yield. Finding a quality blue-chip tech company with these kinds of fundamentals right now is difficult to do.
Invest wisely, my friends.
Tech Insider
