Cisco will be zapped today, maybe even downgraded on disappointing projectoins and earnings. Look for a real leming dive if this thing goes below $17.50.
THEN BUY IT!
This company is a beaten down stock in a beaten down sector that has a p/e of 20 (18 by tomorrow) and 4 yr eps growth of 350%.
Cisco is priced lower than it was in 2002 when revenues were $19B and eps. was .25. 2005 closed out with a mere $24B in revenue but eps shot up to .87. That’s some pretty nice improvement in net margin!
They actually beat expectaions for earnings if you if you exclude some stuff but I always expect the sheep to follow the headlines. Their big headline “miss” on revenues was $6.55B vs. an expected $6.57. Let’s say your hot dog stand was supposed to sell $657 worth of dogs and sodas today and you sold $655 instead – do you dump the business?
Now lets say that your hot dog stand had been having 8 consecutive previous quarters of 10% growth and this one was actually still over 10% but it missed expectations by 2/657? This is why analysts are idiots.
This stock has virtually zero short interest, that in itself ought to tell you something…
Oh yeah, speaking of TASR, I picked up the June ’06 $5 calls for $3.15. My plan is to sell the 10s for .30 each month until it gets close, hopefully that will reduce my basis by $1 so I end up owning the stock for $7 before it gets to $10.
They got another lawsuit dismissed today and a big order from San Diego which I think will be the first of many that have been on hold this year – SD is a very conservative town so any main street USA will consider this a legitimate stamp of approval.
Last time they rebounded from being this oversold was April when they went from 7-12 in one month. They were at $5.44 on Oct. 24th so I’m looking for at least 10 on this run. Of course in April all the negative press was coming out and the lawsuits were starting, now it is the opposite so I will not have a very fast sell trigger on this one.
At this moment (8:39am) I have a toss-up between TASR and PLAY as my stock of the day but
I think PLAY has a more immediate catalyst.
Later,
– Phil
