5 Best Internet of Things (IoT) Stocks To Buy Now

3. Cisco Systems, Inc. (NASDAQ:CSCO)

No of HFs: 59

Total Value of HF Holdings: $3.93 Billion

Cisco Systems, Inc. is an American multinational company that develops IoT applications to help step up business outcomes. During the third quarter of 2020, the company reported a revenue of $12.0 billion.

In an article, Heartland Opportunistic Value Fund mentioned a few comments on the stock.

“A handful of Information Technology (IT) names have been grabbing most of the investment headlines lately, however, as a whole, the sector has been a mixed bag from a performance standpoint. The Russel 3000® Value Index highlights the dynamic where the group ended the period mostly flat. Our holdings in the space outperformed marginally but also contained a key detractor, Cisco Systems, Inc. (CSCO).

Cisco, the world’s leading computer networking provider, was down for the period after revenues from its Products and Applications business lines weakened as IT departments postponed network spending in response to COVID-19. Sales from its security line were up roughly 14% but strength in the segment wasn’t large enough to offset weakness elsewhere. Impressively, they held operating margin on a 9% revenue decline.

Wall Street’s reaction to the weak results were mixed. Some credited the company for executing well in the face of an unprecedented macro pressure on its clients, while others cited results as an indicator that Cisco is struggling in its transformation from a predominantly hardware-oriented business to one that generates recurring-revenue through software and services.

The challenges faced by Cisco strike us as a temporary setback to what has been ongoing progress in its transition to a model that generates recurring revenue and is less tied to the IT spending cycle.

We believe the positive strides made in previous quarters will resume. With the recent setback, shares are trading at an attractive 12x earnings, while generating a nearly 4% dividend yield and a free cash flow/enterprise yield of nearly 10%.”

In a separate article, Brown Advisory also mentioned a few comments on the stock.

“Networking equipment provider Cisco Systems gained after reporting solid quarterly results amid a challenging economic environment. The company’s security and video conferencing products are in greater demand due to the ongoing work-from-home trend, suggesting an improved business growth outlook for the remainder of the year.”

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