This is a mega-cap tech leader for more conservative investors to consider. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.
It provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.
Cisco’s cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe.
Last week, the company reported better than expected fiscal first-quarter 2021 results, though both revenue and earnings were lower than a year ago.
The Jefferies analysts broke down the earnings:
The company reported solid quarterly results and provided above-Street guidance. In our view, these results offered a significant improvement versus fundamental business trends three months ago. Particularly, we highlighted that the company generated 5% year-over year growth in Public Sector product orders during the quarter with strength seen across both U.S. and overseas governmental organizations with particular strength from the U.S. Federal, Department of Defense, and K-12 schools.
Holders of Cisco Systems stock receive a 3.40% dividend. The $51 Jefferies target price compares with the $47.39 consensus target and the most recent close at $41.88.
This home improvement retailer has a low 6% of foreign sales and remains a top pick at Jefferies. Lowe’s Companies Inc. (NYSE: LOW) is a leading home improvement retailer with more than 2,000 stores in North America. The company has tempered its new store opening plans and is focusing investments on technology and e-commerce capabilities, in addition to improving its retail store productivity.
Lowes offers products for maintenance, repair, remodeling and home decorating. It provides home improvement products under the categories of kitchens and appliances, lumber and building materials, tools and hardware, fashion fixtures, rough plumbing and electrical, lawn and garden, seasonal living, paint, home fashions, storage and cleaning, flooring, millwork, and outdoor power equipment. The company also offers installation services through independent contractors in various product categories.
Jefferies analyzed the company’s new tool rental business and they see a $1.5 billion revenue opportunity as a catalyst for multiple expansion. The analysts said this ahead of the earnings report:
We were out with our third quarter preview for the home improvement space, and took estimates higher based on bullish geolocation data, website traffic and vendor checks. Specifically, total US year-over year site visits sequentially accelerated 5% for Home Depot and 11% for Lowes, suggesting e-Commerce. sales growth might surpass the second quarters high-water mark. Our new third quarter EPS estimate for the company is 7% ahead of consensus. While we recently saw rotation out of Home Depot and Lowes, we continue to see a strong fundamental tailwind driven by rising homeownership.
The company reported disappointing results Wednesday morning. While the adjusted earnings per share were a 40.4% increase from the same period last year, they were a penny shy of the consensus forecast. While group revenues rose 28.2% and topped analysts’ estimates, a disappointing holiday season outlook sent shares sharply lower in premarket trading.
Investors receive a 1.48% dividend. The Jefferies price target is set at $205. The consensus target is $185.22, and Lowe’s stock was last seen at $159.86 per share. Shares were almost 8% lower in the premarket action.
These four top stocks offer investors with a longer time horizon solid value and outstanding entry points. They are outstanding ideas for those looking to leave pricier growth companies but wanting to keep their chips on well-known large-cap leaders. With the prospects for 2021 looking very good, rotating some capital to value plays makes good sense now.
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