Why Cisco Systems, Inc. (CSCO) Is a Buy; The Answer May Surprise You

Competition

Juniper Networks, Inc. (NYSE:JNPR) is one company pinning its hopes on sustained growth in the sector. Its motivation intensifies the competitive environment in the industry. For the fiscal 2013 first quarter, the company’s revenue was $1.05 billion, down 7% over the 2012 fourth quarter, and up 3% from the year ago quarter. Net income fell to $0.24 from $0.28 in the prior quarter, but was up from $0.16 in the year-ago quarter.

Its industry peer HP still has yet to gain traction in the sector. In in its fiscal 2013 first quarter, HP reported net revenues of $28.4 billion, down 6% year over year and down 4% when adjusted for the effects of currency. Earnings per share (EPS) was $0.63, down from $0.73 in the prior-year period but above its outlook of $0.34 to $0.37 per share.

Like Hewlett-Packard Company (NYSE:HPQ), Alcatel Lucent SA (NYSE:ALU) appears to be facing challenges. It posted fiscal 2012 fourth quarter revenues of $5.33 billion, up 13.8% quarter-over-quarter but lower by 1.3% year-over-year. It reported full year revenues of $18.79 billion, lower by 5.7% year-over-year. It recorded a fourth-quarter net loss of $1.78 billion or $0.78 per share.

The unhealthy top- and bottom-line record for Alcatel Lucent SA (NYSE:ALU) may not spark investor interest. Having a $1.72 one year target, the company shares have been trading within the $1.32- $1.40 band recently. The same thing can be said of Juniper, which has a $21.68 one-year price target. Peaking at $22.98 a few weeks ago, the stock has declined 25% to $17.36. With a P/E ratio of 49.60, Juniper also appears expensive compared to Cisco Systems, Inc. (NASDAQ:CSCO).

However, value investors could be more at ease with Cisco, which posted an EPS of $1.74. It posted strong 2013 first quarter results. Prospects seem bright, and it is expected that the company will pull off surprises with its products.

Summary

Cisco Systems, Inc. (NASDAQ:CSCO) is arguably the best managed company of the three. I expect the company to maintain its upward momentum. And its partnership with such companies as NBC Olympics and EMC Corporation (NYSE:EMC) has enabled it to expand business services without having to restructure the company. Investors are likely to be impressed by the multiple growth initiatives Cisco has in the pipeline for the next quarter, especially its elastic core network device.

The article The One Stock You Should Buy This Month originally appeared on Fool.com.

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