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CSCO valuation in Sept. was 48x trailing earnings. in the last 6 years this was an
historic high. When CSCO was trading near 50, the valuation was
38x trailing earning. I got a lot of my freinds to buy right
after the STRM deal. CSCO is the best positioned company, and
will probably out proform the other two through the year 2000.
Don't expect more than 40% a year, but that means you only need
to wait two years to double your money. This is a tremendous
stock that will eventually be compared to Microsoft. However,
COMS is under valued in comparison, and should do better than CSCO
through the summer. I don't own CSCO currently, I sold in March,
1995 at a pre-split price of 34. by October, the stock hit 100.
(dumb move). I intend to buy on the next big correction, (over 10%) and I see CSCO backing up at lease to its current price when that happens. By the end of summer CSCO will hit 65. So could COMS if it can still compete. CSCO will have another problem that will become news in the next 4 months, the STRM deal could delute the sales and earnings exceleration that has occurred. Fear will cause the big boys not to run the price too high. In the long run the merger possitions CSCO as the premere player in a field that is growing at a 40% clip. As for Magelan, there will be a resuffling in its portfolio, but most experts are saying that it will take a year to fully impliment the changes. They really have no choice but to gradually change over the fund. If they dump the bonds, both bonds and stocks will go down. The new manager may buy some CSCO, but not enough to make a big move. He will look for an entry point that he fells comfortable with. That may cushion any decline in techs in general. Don't buy |
