Is Cisco Systems, Inc. (CSCO) Your Best Valentine?

Within the context of Cisco’s decisions on how to deploy resources, Chambers explained that the company was beginning to see signs of strength in Europe. While the region as a whole was weak, he pointed out that if certain nations were broken out, Germany in particular, numbers are beginning to firm and show promise. In the company’s core businesses, Chambers is very satisfied with the trajectory that the statistics suggest.

Core growth
Two of Cisco’s core segments from which it derives up to half of its business are switches and routers. While switch revenue climbed by 3%, revenue from router sales dropped by 6%. These figures might represent a source of concern for shareholders, but Chambers points out that sales numbers for the company tend to be “lumpy.” In an example, he explained that moving a single order by a day — from one quarter to the next — could result in a dramatic difference in reported results. On a rolling full-year basis, router sales are more stable and a far better measure of the company’s position.

With a 2.7% dividend yield and growth in the mid-single digits, Cisco continues to look more and more like a value stock in growth’s clothing. What appeals to me about the stock beyond this profile is in the pent-up potential. Cisco wasn’t even in the router business a decade ago, so its ability to shift gears is proven. The significant upside growth potential makes the company more than just a value stock and should earn it a place in your portfolio.

The article Is Cisco Your Best Valentine? originally appeared on Fool.com and is written by Doug Ehrman.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems.

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