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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (37188)	12/30/2000 10:41:02 AM
From: Bruce Brown	Respond to of 54805

The most attractive companies to me are those that have deep penetration in a rapidly growing sector. This allows them to enjoy excellent revenue growth even if they should lose market share. That explains why I hold Silverback Cisco rather than Juniper Networks. Quite true, yet investors can't overlook some of the developments going on in areas of technology - both in software and hardware. Brocade Communications and Juniper Networks are certainly two of the most exciting companies to come along in niche enabling-hardware land in the past couple of years. Network Appliance being another, yet it is a few years older in terms of being a public company. All three have various degrees of software involved in their games which certainly moves their respective games up the layer of technology scale a notch or two. If we go back to the IPO of Brocade Communications in the first half of 1999, we can see what the market has been saying in regards to the revenues and earnings of Brocade, Juniper, Network Appliance and Cisco since that public debut: quote.fool.com Even if we look in the eye of this dismal past YTD, Brocade, Juniper and Network Appliance had good years for investors that held through it all: quote.fool.com Moving out to a three year or a four return, Cisco's excellent return in those time frames is still less than those companies again: 3 year quote.fool.com 4 year quote.fool.com We could also compare the top and bottom line growth of each of those companies to see what the underlying financial performance has been behind the technologies. I know the margins quite well of all four companies because they all reside in my portfolio and I follow them closely. This fits within my 'age mix' approach which the author's helped my identify in the original version of the manual. I remain very attracted to their introduction of the strategy of combining baskets within new games along with holding some of the 'grandfather gorillas' in a portfolio. We can also take that back and view the past 5 years to see how our 'grandfather gorilla' Cisco did in comparison with younger companies in their prime such as Checkpoint, BEA Systems, i2 Technologies, Siebel Systems and Network Appliance: quote.fool.com I hold 'grandfather gorillas' in my portfolio. One of them has now moved to being a member of the DOW and I fully expect Cisco to join Intel and Microsoft in the next year to become a DOW stock. When we start talking about time frames of two, three, four and five years in terms of investment returns, there enters into the fold an element that one cannot be too overly protective by only investing money in the 'grandfathers' because the risk then turns towards becoming a potential loss of growth. This most likely applies more to those that are younger and have longer term time horizons which require more growth to meet the investing goals and needs. Time will tell going forward what rises out of this year's retracement in valuation corrections and the growth bumps in the economic climate, but I would imagine some of the dynamic franchises being built with the younger companies will fare quite well going forward. I also imagine 'grandfathers' like Cisco, Intel and Oracle will continue to do well. At least it is something to think about as we move through generations of hardware and software over the years. Plenty of exciting developments in network applications and segments of infrastructure to keep us occupied going forward. It will be interesting to see how the franchises of Network Appliance, Brocade Communications, Juniper Networks and many others develop going forward. The previous post from Barron's was a pretty fair look at Brocade and the industry. BB