MONDAY, NOVEMBER 5, 2007
A New Sweet Spot for Growth Investing
Interview With B. Anthony Weber, Founder, Veredus Asset Management
In the large-cap growth arena, where in particular are you seeing strength?
The consumer continues to drive a lot of Internet traffic. It is the consumer using YouTube, MySpace and Facebook. It is the proliferation of the Internet in our everyday lives. Consumer Internet traffic is growing at 58% and should double every two years, and business Internet traffic is growing at 21%. The key drivers there are going to be high-definition video and higher-speed broadband penetration. Cisco [ticker: CSCO], especially through its acquisition of Scientific-Atlanta, is the biggest beneficiary of all this. Cisco will also benefit as broadband usage makes gains in the emerging markets. Wall Street is estimating earnings at $1.84 a share for fiscal '09, and we think the number could be upwards of $2.15 to $2.20. Here's a company generating 30% operating margins that arguably could sell at a 20-25 multiple at least, and the stock is at 33. If any of the money that's been flowing into international funds starts to come back to the States, which it will eventually, it will go to big recognizable and scalable brand names such as Cisco.
online.barrons.com |
