Cisco Systems, Inc. (CSCO) Is the Best Pick in the Networking Sector

On the other hand, Alcatel Lucent SA (ADR) (NYSE:ALU) has completely redesigned its business model via its “Shift Plan.” Management is planning to re-position its services from a telecommunication generalist to an industrial specialist. IP networking and Ultra-Broadband Access seem to be the core focus of the business. This French giant has evolved its product portfolio through the addition of IP, cloud, and ultra-broadband services. Like its competitors, Alcatel-Lucent is looking to benefit from software-driven growth.

Summary

Cisco Systems, Inc. (NASDAQ:CSCO) is the pick of the bunch in my opinion. The company is capturing the rapidly growing cloud computing segment while the conventional networking equipment segment is growing slowly. Cisco has massive cash flows (over $10 billion in free cash flows in 2012), which will ensure the company is able to make necessary acquisitions. Furthermore, there is the prospect of attractive dividend. Solid cash flows and growth opportunities make it one of the best dividend stocks in the market.

On the other hand, Juniper Networks, Inc. (NYSE:JNPR) is also making some serious forays in the cloud computing segment. In addition, its presence in emerging markets should augment future growth and we should see significant price appreciation over the next two years.

Alcatel Lucent SA (ADR) (NYSE:ALU) is probably the riskiest pick in the bunch. The company has been facing a lot of internal issues with slowing global demand for networking equipment. However, there has been substantial improvement in the stock price and the stock has gone up more than 100% in the past twelve months. If management is able to execute its strategies well, then Alcatel-Lucent might prove to be an attractive investment. However, investors should be patient with Alcatel-Lucent and only risk savvy investors should choose it, in my opinion.

The article Cisco Is the Best Pick in the Networking Sector originally appeared on Fool.com and is written by Ishtiaq Ahmed.

Ishtiaq Ahmed has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems (NASDAQ:CSCO). Ishtiaq is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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