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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Techplayer who wrote (25852)	5/19/1999 1:08:00 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 77400

Sold all my remaining Cisco this morning, at 115 13/16. Doubled up on RIG, limit order @ 25 filled. I thought a comparison of the two stocks would be interesting: CSCO RIG 3-19 1.7-7 5 year P/S range 17 2.3 P/S today 15-91 6-60 5 year P/E range (trailing) 84 8 P/E today (trailing) 30% 14% expected long-term earnings growth 2 0.5 PEG, approximately CSCO is just below its all-time high, and has been bumping against resistance at 120 all year. RIG has a long-term support line at 25, which is where it is at today, down from highs of 60 in 1997 and 1998. One is in an industry that is in favor, and is a large cap tech. The other is in an industry that is strongly out of favor, and is a small cap non-tech. Eventually, I'll probably put my money back into CSCO. But, for now, I feel safer owning RIG. I think if I try very hard not to lose money, that's the best way to make money. The downside on RIG is minimal, while there is a lot of air underneath CSCO. A 20% drop in CSCO is a near certainty, and a 40% drop is possible, from today's level. I have a 6-bagger with CSCO; until this week, I had sold none and bought none since April 1997. Since that time, the earnings have about doubled, and the PE has about tripled. From here on out, price appreciation in CSCO stock has to come entirely from earnings growth. PE expansion, from today's levels, is unlikely. Actually, the Law of Reversion to the Mean says that the most likely next step is PE contraction. The Fed's move was the final piece of info that tipped me into selling all my remaining CSCO this morning. It makes PE contraction likely, especially in stocks selling at a trailing PE in the 80s, with a PEG of 2. RIG, btw, is a specialist in drilling for oil in deep water and hostile environments.