Cisco Casino Play Lotto scratch off play.

Discussion in 'Trading' started by KINGOFSHORTS, Feb 7, 2011.

  1. April22 calls @ .10/.11 look like a good reverse trade from here.
     
    #21     Feb 10, 2011
  2. volente_00

    volente_00

    Hell of a call

    Perhaps you can give atticusriskarb some pointers.
     
    #22     Feb 10, 2011
  3. S2007S

    S2007S

    Remember this article from nearly 11 years ago, what does this tell you. Everyone thought CSCO was the leader and that the company could only keep growing and growing, fast forward a decade later and look where the company is today, shares are still down from the peak of over $100+ a share, who knows if they will ever get to that share price ever again!



    Friday, March 17, 2000
    Firm's market cap climbing to $1 trillion
    Silicon Valley / San Jose Business Journal - by Dennis Taylor Business Journal Staff Writer




    One trillion dollars.

    That's how much at least one analyst believes Cisco Systems Inc. will be worth in a few years--and you'd be hard pressed to find anyone to disagree.

    The San Jose-based networking behemoth's stock closed March 14 at $131.75 a share, slightly down from its March 10 one-year high of $141.88 (The entire Nasdaq slid 4 percent on March 14.)

    Thirty-seven investment banks recommend either a "buy" or a "strong buy." None recommend a "sell" or even a "hold."

    On any given day the volume of Cisco shares traded is the equivalent of every man, woman and child living in California--having hit 33 million as recently as March 9.

    George Kelly, an analyst with Morgan Stanley Dean Witter in New York who took Cisco public a decade ago, is one of the Cisco bulls. Cisco's stock is trading at roughly 120 times Mr. Kelly's earnings' estimate of $1.13 per share.

    The multiple, or price-to-earnings ratio, is a number that places a value on a stock. It is a ratio of the price of the stock to the profit of a company expressed per shares outstanding.

    "A low P/E usually signals investors are uncomfortable," Mr. Kelly said.

    As a reference, in 2000 Cisco's multiple of 120 compares to Microsoft Corp.'s multiple of 55 and Intel Corp.'s multiple of 42. Yet their values are below Cisco.

    "One of the reasons investors value Cisco so highly right now is that, unlike Microsoft, Cisco doesn't have the uncertainty of a Justice Department settlement--it's a much cleaner situation," Mr. Kelly said. "Second, Cisco has had a tremendous track record of continuous upside surprises. And Cisco is viewed as opening several new markets, the biggest of which is optical, which is expected to be an explosive market."
    Perfect returns

    Paul Weinstein, an analyst with Credit Suisse First Boston, believes a $1 trillion market capitalization (stock price multiplied by shares outstanding) is within reach in a few years. He said Cisco's stock has increased 1,000 times, a perfect 100 percent annual return since it launched its IPO in 1990.

    "We humbly submit that over the next two to three years, Cisco could be the first trillion dollar market cap company--and don't think they wouldn't love it," Mr. Weinstein wrote in his "strong buy" recommendation.

    As of March 14, Microsoft's market cap stood about $510 billion, compared with Cisco's $465 billion, which is threefold the annual revenue of the state of California.

    Michael Neiberg, lead analyst in the communications equipment sector for Chase Hambrecht & Quist in New York, said Cisco is turning a lot of investors long-term.

    "If you had picked a price point to sell [high] at anytime in the past 10 years, you would have been wrong," he said. "They have such an impressive track record of growing ... that the financial community isn't thinking in terms of a multiple of what they're earning this year, but what they will be earning three or four years down the line."
    An opposing view

    There are market watchers that are dubious, however, about the high valuation assigned to a large-cap company like Cisco.

    Jeremy Siegel, a finance professor at the Wharton School, wrote this week in The Wall Street Journal that the high valuation assigned to large-cap technology stocks--Cisco is at the top of his list--are unsustainable.

    "History has shown that whenever companies, no matter how great, get priced above 50 to 60 times earnings, buyer beware," Mr. Siegel wrote.

    His statistical research concludes when companies reach big-cap status--ranked in the top 50 by market capitalization--their ability to generate long-term double-digit growth slows dramatically.
    Young bucks in a different field

    Looking at multiples of high-flying valley gazelles that compete with Cisco is almost meaningless.
     
    #23     Feb 10, 2011
  4. Nice call. Wish I had seen it before the close. I remember your last one was solid as well.
     
    #24     Feb 10, 2011
  5. apple now has a higher Market cap now than cisco or microsoft.


    still kicking myself for missing this one now cisco is even lower!
     
    #25     Feb 10, 2011
  6. I am seeing long term support at around 18, a break under that is going to make some people very nervous. It seems inevitable that we touch 20 again on this.
     
    #27     Feb 10, 2011
  7. I think many of the "nervous nellies" got out today, 559 MILLION shares traded. The margin desks were probably quite busy.

    I agree also, 20 and above will print again, just dead money for awhile. No worries though, a CNBC analyst will soon tout the "valuation" and give it an "upgrade" to run it back up.
     
    #28     Feb 10, 2011
  8. #29     Feb 10, 2011
  9. rew

    rew

    On an earnings option play you not only have to get the direction right but you're fighting a drastic IV drop. So I have to give KINGOFSHORTS his due -- he nailed that one. A 10 bagger in three days. Nice.
     
    #30     Feb 10, 2011