In contrast, Cisco was one of the ten most popular tech stocks among hedge funds for the third quarter of 2012, with 59 hedge funds and other notable investors in our database of 13F filings reporting a position. See the full rankings and read our most recent report on Cisco. Cisco hasn’t been as impacted by recent industry developments as Juniper, with a trailing P/E of only 12. With it too expected to improve in 2013, the stock trades at 9 times forward earnings estimates. Its earnings were actually higher in its most recent fiscal quarter (which ended in October) than in the same period last year, so its business has been performing relatively well recently. In addition, Cisco has a well-deserved reputation as a relentless share repurchase and also pays a dividend yield of about 3%. It seems like a better buy to us.
We can also compare Juniper to Alcatel Lucent SA (NYSE:ALU), Palo Alto Networks Inc (NYSE:PANW), and Riverbed Technology, Inc. (NASDAQ:RVBD). Alcatel-Lucent’s stock price has dropped 31% in the last year, and in its most recent quarter reported a small decline in revenue. Palo Alto has very low earnings per share numbers compared to its stock price, and so the stock is dependent on very strong earnings growth over the next several years. We think that we’d avoid both of these stocks, particularly in favor of Cisco. Riverbed’s multiples look similar to Juniper’s: the trailing P/E is high, but the company is expected to improve next year and so it trades at only 15 times consensus 2013 earnings. Riverbed can also boast a 28% growth rate in net income last quarter versus a year earlier, driven by both good revenue growth and higher margins. It might be a good growth play if it can keep performing well for the next couple quarters, but we still think that we’d stick with Cisco for now.