Cisco Systems (CSCO) Stock Poised for Further Gains
As we noted one week ago here: Cisco Systems (CSCO) Stock Poised to Rise, Resume Bullish Trend, Cisco Systems (CSCO) stock was poised to rise and continue its bullish trend after temporarily pulling back. Well, it’s happened. Since our bullish call last week, the stock has risen more than 9%.
It’s been easy to overlook that Cisco – a tech kingpin of the 90’s and former bellwether of the industry – is back in a big way.
In fact, the networking and telecom equipment maker has been gradually clawing its way back to market relevance ever since its stock took a massive dive in the first couple years of the 2000’s. Since bottoming in late 2002, the stock has been in various stages of consolidation and recovery.
Within the past three years, though, CSCO has staged a steeper recovery. The stock has risen 27% this year alone (year-to-date as of Monday). And just two months ago, in early October, CSCO stock reached almost an 18-year high near $50 per share.
Headwinds and Tailwinds
What accounts for Cisco’s long-overdue rebirth? In recent years, the company has faced many challenges potentially threatening its business. Most importantly may be the emerging dominance of cloud technology, particularly from Amazon.com (AMZN) and Microsoft (MSFT). But Cisco recently assured investors that it is facing these challenges head-on, and that it is positioning itself to be an integral aspect of the cloud-based economy.
The company also recently reassured investors that a U.S.-China trade war would not have a significant impact on its business. (CSCO stock surged further on Monday along with most of the market after President Trump and Chinese President Xi agreed to pause the trade war for the time being.)
And as for recent company performance, several of Cisco’s primary business units achieved double-digit growth last quarter.
The technicals for CSCO remain similar to last week’s in terms of the strong bullish trend. However, since price is 9% higher now, the potential entry is not nearly as advantageous now as it was last week. And some indications are pointing to the stock being overbought. Still, CSCO remains bullish overall, especially with any potential breakout above $50. But keep in mind that profit-taking, which could pressure the stock at or near the current price, is likely.
At the very least, though, the fabled tech giant appears to be on much surer footing than before, and is potentially poised to regain its status as a major force among the tech stock high-flyers.
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Past performance is not indicative of future results. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don