January 31, 2023

Tech Hype Cycle and Value Investing, Part I

One of the immutable laws of technology investing is that all tech stocks go through the Hype Cycle. Well over a century ago, leading-edge tech stars like railroads went through their boom-and-bust phases. The 20^th century included the notable enthusiasm-and-disillusionment in radio, television, automobiles, copy machine and IBM (its own industry for years) stocks, ending with the exceptional dot-com bubble.

Highly regarded technology research and consulting firm Gartner plots this hype arc in their chart, below. While the rise and fall, and time length, are different for each stock and industry, the chart effectively captures the changes in investor mindset through the cycle. Changes in the investor mindset invariably drive changes in tech stock prices.

The latest tech cycle has been unusually long. The iPhone was first introduced in June 2007, nearly 16 years ago. Netflix was founded in 1997 and effectively created the streaming business in 2007. Companies like Google (now Alphabet) and Facebook (now Meta Platforms) have been publicly traded for nearly a decade, while their dominance was well-known years earlier. Much of the current cycle was driven by the emergence of 4G wireless service. But the benefits of this technology – as amazing as it was when first launched – have reached their limit. And, these companies are approaching the limits to their market share gains.

The upcycle in the early left-hand side of the chart, while impressively elongated, has now been completed. Tech cycle late-comers, like the flash-in-the-pan companies that rode on the coattails of the mega-trends, paired with the brief surge in pandemic trends, experienced very short-lived upcycles.

As investors have sensed the peak, the share valuations have slid (rather sharply for many). The jump in interest rates from zero to 4.5%, and the new-found constraints on previously free money, hastened their unwinding.

Next week, we will look at the part of the hype cycle that Gartner left out.

Share prices in the table reflect Monday, January 30 closing prices. Please note that prices in the discussion below are based on mid-day January 30 prices.

Note to new subscribers: You can find additional color on past earnings reports and other news on recommended companies in prior editions and weekly updates of the Cabot Undervalued Stocks Advisor on the Cabot website.

Send questions and comments to Bruce@CabotWealth.com.

Today’s Portfolio Changes

Comcast Corp. (CMCSA) – Moving the shares from Buy to Hold.

State Street Corp. (STT) – Moving the shares from Buy to Hold.

Last Week’s Portfolio Changes

None.

Upcoming earnings reports

Sensata Technologies (ST) – Tuesday, January 31

Gates Industrial Corp (GTES) – Thursday, February 9

Cisco Systems (CSCO) – Tuesday, February 14

Allison Transmission Holdings (ALSN) – Wednesday, February 15

Barrick Gold (GOLD) – Wednesday, February 15

GROWTH/INCOME PORTFOLIO

Cisco Systems (CSCO) is facing revenue pressure as customers migrate to the cloud and thus need less of Cisco’s equipment and one-stop-shop services. Cisco’s prospects are starting to improve under a relatively new CEO, who is shifting Cisco toward a software and subscription model and is rolling out new products, helped by its strong reputation and entrenched position within its customers’ infrastructure. The company is highly profitable, generates vast cash flow (which it returns to shareholders through dividends and buybacks) and has a very strong balance sheet.

There was no significant company-specific news in the past week.

CSCO shares rose 2% for the week and have 37% upside to our 66 price target. The valuation is attractive at 9.7x EV/EBITDA and 13.6x earnings per share. The 3.1% dividend yield adds to the appeal of this stock. BUY

Comcast Corporation (CMCSA) – With $120 billion in revenues, Comcast is one of the world’s largest media and entertainment companies. Its properties include Comcast cable television, NBCUniversal (movie studios, theme parks, NBC, Telemundo and Peacock), and Sky media. The Roberts family holds a near-controlling stake in Comcast. Comcast shares have tumbled due to worries about cyclical and secular declines in advertising revenues and a secular decline in cable subscriptions as consumers shift toward streaming services, as well as rising programming costs and incremental competitive pressure as phone companies upgrade their fiber networks.

However, Comcast is a well-run, solidly profitable and stable company that will likely continue to successfully fend off intense competition while increasing its revenues and profits, as it has for decades. The company generates immense free cash flow which is more than enough to support its reasonable debt level, generous dividend and sizeable share buybacks.

Comcast reported a reasonable quarter, with relatively stable revenue and profits, despite sharply larger losses at its Peacock streaming unit. The company raised its dividend by 7.4% and continued to repurchase shares ($3.5 billion in the quarter). Free cash flow fell 65% due to lower profits, higher capital spending, higher interest expenses and higher cash taxes. The balance sheet maintained a steady leverage ratio. We expect that 2023 will look about like 2022, but with more losses at Peacock as the company continues its rollout. We anticipate improvement in 2024 as ad spending recovers and as capital spending steps down. All in, the Comcast story remains on track as an undervalued grind-it-out producer of free cash flow.

Revenues rose less than 1% and were fractionally above estimates. Adjusted earnings of $0.82/share rose 7% from a year ago and were 5% above the consensus estimate of $0.78/share. Adjusted EBITDA fell 5% and was about 4% below estimates. Excluding severance costs, EBITDA was higher than a year ago.

The core cable business remains flat-to-positive. Revenue growth was 1% while adjusted EBITDA rose about 2%. Revenues and profits are being maintained by incrementally higher pricing as the customer count is flat. The service mix is shifting away from traditional services (video, voice) to broadband and wireless – the effect on profits appears to be positive, although incrementally higher capital spending is incrementally eroding the economics. Free cash flow was down 2%.

NBC Universal revenues rose 6% but profits slid by 36% due to higher Peacock losses along with higher FIFA World Cup programming costs, weaker revenues from its linear TV operations and higher severance costs. Capital spending for the segment doubled in 2022 vs 2021 due to the construction of the Epic Universe theme park in Orlando set to open in 2025. The Peacock subscriber count increased to over 20 million (more than double a year ago and up over 33% from last quarter). However, losses in Peacock were higher ($978 million loss vs $559 million loss a year ago). The full-year Peacock loss was $(2.5 billion) and a $(3 billion) loss was guided for 2023. In our view, Comcast needs to rein in these losses significantly starting no later than year-end 2023 – if this business isn’t improving by then it may be a chronic money-loser.

Sky revenues fell 1% due to weaker advertising and other pressures. EBITDA fell 15% on higher severance and other costs. The overall profit trend in this segment is positive but lumpy from quarter to quarter. Full-year profits were up 7%.

Comcast shares dipped 2% for the past week and have 6% upside to our 42 price target. The shares have limited upside, but the earnings report was reasonable enough to keep the stock a bit longer. We are moving the shares to a Hold. The shares offer an attractive 2.7% dividend yield. HOLD

Dow Inc. (DOW) is the world’s largest producer of ethylene and polyethylene, the most widely used plastics. Investors undervalue Dow’s hefty cash flows and sturdy balance sheet largely due to its uninspiring secular growth traits, its cyclicality and concern that management will squander its resources. The shares are driven by: 1) commodity plastics prices, which are often correlated with oil prices and global growth, along with competitors’ production volumes; 2) volume sold, largely driven by global economic conditions, and 3) ongoing efficiency improvements (a never-ending quest of all commodity companies). Recent concerns about a recession have sent Dow shares to well-below our estimate of their fair value, even as the company’s long-term prospects and ability to maintain its dividend are attractive. Dow shares are a recommended Buy in our sister publication the Cabot Turnaround Letter.

Dow reported a reasonable quarter given the weakened global economy and what may have been over-ordering and hoarding by industrial customers when supplies were short a year ago. Revenues of $12 billion fell 17% from a year ago and were about 2% below estimates. Adjusted operating earnings of $0.46/share fell 79% and were about 19% below the $0.57/share estimate. The outlook was mildly encouraging.

Overall, Dow remains well-managed, well-capitalized and well-positioned for an eventual economic recovery while having reasonably defensive traits barring a sharp decline in energy prices and pricing spreads which we see as unlikely.

In the quarter, the revenue decline was composed of a 5% price decline, 8% volume decline and 4% currency drag due to the strong dollar. Economic weakness and destocking by customers drove the weaker volumes. Dow has exposure to a broad range of intermediate/end markets, so the declines were not particularly surprising. Operating profits fell sharply due to the fixed-cost nature of Dow’s operations and the weaker pricing which is generally a straight hit to profits. During the quarter, the company continued to control what it could: costs, production volumes and production mix. For 2023, Dow said these efforts would drive $1 billion in savings.

Fourth-quarter free cash flow was $1.5 billion. This flow was sharply higher than earnings, so it appears to have been boosted by a strong contribution from working capital as lower production and demand allowed Dow to cut its inventory and receivables. Just over a third of the free cash flow was returned to shareholders in dividends and share repurchases.

The balance sheet remains sturdy, with $10 billion of net debt. Dow’s pension underfunding was headed toward zero but it still has a shortfall of $2.5 billion.

Dow shares rose 1% in the past week. The stock has 3% upside to our 60 price target (same as in the Cabot Turnaround Letter). After a long slog since this name was originally recommended in April 2019, before the current analyst arrived, the Dow investment is finally showing a profit relative to our cost.

The quarterly dividend appears readily sustainable and provides an appealing 4.8% yield. The shares trade at an 8.5x EV/EBITDA multiple and 17.2x EPS on recession-minded 2023 estimates. These estimates fell sharply due to the weak 4Q results but don’t appear to reflect the company’s underlying earning power.

Following the earnings report, we are reviewing our rating and price target. BUY

State Street Corporation (STT) – State Street is the world’s largest custodian bank, with $38 trillion in assets under custody/administration. About 56% of its revenues are produced from custody, client reporting, electronic trading and full enterprise solutions services for investment managers. The balance is produced from investment management fees on ETFs, foreign exchange fees, securities financing fees and net interest income. The industry has combined into four dominant firms due to economies of scale. State Street’s shares are out of favor and unchanged since 2007 due to concerns over its anemic growth and steady pricing pressure from competitors. However, we see State Street as a solid, well-capitalized franchise that provides critical services, with a slow-growth but steady revenue and earnings stream. Our interest in STT shares is that we can buy them at an attractive valuation. We also find the dividend yield appealing.

On January 20, State Street reported a solid quarter, gave reasonably favorable guidance for 2023 and announced a large $4.5 billion share buyback plan (nearly 15% of the firm’s market value) to be completed this year. The encouraging update is helping drive the shares higher.

Revenues of $3.2 billion rose 3% from a year ago and were about 4% above expectations for a small decline. Adjusted earnings of $2.07/share rose 3% from a year ago and were 6% above expectations for a decline.

Management guided to flat fee revenues but another 20% increase in net interest income in 2023, which would be partly offset by 3.5-4.0% higher expenses.

In the quarter, revenues were boosted by the 63% year/year increase in net interest income, which more than offset lower fee revenues. The net interest spread expanded to 91 basis points from 73 basis points a year ago, as higher yields on its earning assets more than offset rising costs for its deposits and other borrowings. Earning assets, which are primarily short-term securities, fell 8%.

Fee income fell 6%, driven by a 13% decline in servicing fees. Much of State Street’s fee income is directly linked to the market value of equities and bonds in its custody, which declined 16% from a year ago, to $36.7 trillion. Lower securities prices were partly offset by business wins that brought in new assets. Software and processing fees rose a healthy 16%. All other sources of fee income were generally mixed.

Expenses excluding minor adjustments were flat – an encouraging indicator that the bank is better able to control its costs.

All of these line items added up to a pre-tax margin of 30.9%, up 2.8 percentage points from a year ago. This margin is a key driver of the shares, as it indicates that the bank’s core profitability is healthy.

State Street’s capital remains robust at 13.6% (CET1), well above its 8% regulatory minimum and its own 10-11% target. Given its excess capital, partly due to the unneeded equity raise related to the now-terminated deal to buy Brown Bros’ custody operations, State Street announced a new $4.5 billion stock buyback plan that is to be completed this year. This plan would repurchase as much as 15% of the company’s total market value.

There was no significant company-specific news in the past week.

State Street shares rose 5% in the past week and have 3% upside to our 94 price target. The company’s dividend (2.8% yield) is well-supported and backed by management’s strong commitment. Given the limited upside, we are moving the shares to a Hold rating. HOLD

BUY LOW OPPORTUNITIES PORTFOLIO

Allison Transmission Holdings, Inc. (ALSN) – Allison Transmission is a midcap manufacturer of vehicle transmissions. While many investors view this company as a low-margin producer of car and light truck transmissions that is destined for obscurity in an electric vehicle world, Allison actually produces no car or light truck transmissions. Rather, it focuses on the school bus and Class 6-8 heavy-duty truck categories, where it holds an 80% market share. Its EBITDA margin is sharply higher than its competitors and on par with many specialty manufacturers. And, it is a leading producer and innovator in electric axles which all electric trucks will require. The company generates considerable free cash flow and has a low-debt balance sheet. Its capable leadership team keeps its shareholders in mind, as the company has reduced its share count by 38% in the past five years.

There was no significant company-specific news in the past week.

ALSN shares rose 5% in the past week and have 8% upside to our 48 price target. The stock pays a respectable and sustainable 1.9% dividend yield. BUY

Aviva, plc (AVVIY), based in London, is a major European company specializing in life insurance, savings and investment management products. Amanda Blanc, hired as CEO in July 2020, is revitalizing Aviva’s core U.K., Ireland and Canada operations following her divestiture of other global businesses. The company now has excess capital which it is returning to shareholders as likely hefty dividends following a sizeable share repurchase program. We expect that activist investor Cevian Capital, which holds a 5.2% stake, will keep pressuring the company to maintain shareholder-friendly actions.

Aviva shares jumped on January 25 as the company provided a favorable update: that its costs from the cold weather in the U.K. would be manageable. Other U.K. insurers hadn’t fared as well. Also, Aviva reiterated its full-year 2022 profits and payouts, adding another piece of encouraging news.

Aviva shares rose 3% this past week and have 24% upside to our 14 price target. Based on management’s estimated dividend for 2023, the shares offer a generous 6.7% yield. BUY

Barrick Gold (GOLD), based in Toronto, is one of the world’s largest and highest-quality gold mining companies. About 50% of its production comes from North America, with the balance from Africa/Middle East (32%) and Latin America/Asia Pacific (18%). Barrick will continue to improve its operating performance (led by its highly capable CEO), generate strong free cash flow at current gold prices, and return much of that free cash flow to investors while making minor but sensible acquisitions. Also, Barrick shares offer optionality – if the unusual economic and fiscal conditions drive up the price of gold, Barrick’s shares will rise with it. Given their attractive valuation, the shares don’t need this second (optionality) point to work – it offers extra upside. Barrick’s balance sheet has nearly zero debt net of cash. Major risks include the possibility of a decline in gold prices, production problems at its mines, a major acquisition and/or an expropriation of one or more of its mines.

There was no significant company-specific news in the past week.

Over the past week, commodity gold rose fractionally to $1,924/ounce. Since late October, the gold price has lifted 17%. The 10-year Treasury yield ticked up to 3.55% while the U.S. Dollar Index (the dollar and gold usually move in opposite directions) was unchanged at 102.07. The dollar has fallen 10% from its high of 114.10 this past September 26.

Investors and commentators offer a wide range of outlooks for the economy, interest rates and inflation. We have our views but hold these as more of a general framework than a high-conviction posture. Investing in gold-related equities is a long-term decision – investors shouldn’t allow near-term weakness to deter their resolve.

Barrick shares rose 1% in the past week. The stock has 39% upside to our 27 price target. BUY

Big Lots (BIG) – Big Lots is a discount general merchandise retailer based in Columbus, Ohio, with 1,431 stores across 47 states. Its stores offer an assortment of furniture, hard and soft home goods, apparel, electronics, food and consumables as well as seasonal merchandise. Our initial case for Big Lots rested with its loyal and growing base of 22 million rewards members, its appeal to bargain-seeking customers, the relatively stable (albeit low) cash operating profit margin, its positive free cash flow, debt-free balance sheet and low share valuation. Our thesis was deeply rattled by the company’s surprisingly large inventory glut in the first quarter 2022, likely burdening it with new and permanent debt.

There was no significant company-specific news in the past week.

Big Lots shares remain high-risk due to the permanent debt balance and the likelihood of a suspension of the dividend.

We reiterate our view that Big Lots shareholders who are not willing or able to sustain further losses in the shares should sell now. There is no reasonably definable floor to a stock like Big Lots when fundamentals and valuation are ignored while investors reduce their risk exposure.

Big Lots shares fell 5% yet again this past week. The stock has 54% upside to our revised 25 price target. The shares offer a 7.4% dividend yield, although, as noted, investors should not rely on this dividend being sustained. HOLD

Citigroup (C) – Citi is one of the world’s largest banks, with over $2.4 trillion in assets. The bank’s weak compliance and risk-management culture led to Citi’s disastrous and humiliating experience in the 2009 global financial crisis, which required an enormous government bailout. The successor CEO, Michael Corbat, navigated the bank through the post-crisis period to a position of reasonable stability. Unfinished, though, is the project to restore Citi to a highly profitable banking company, which is the task of new CEO Jane Fraser.

On January 13, Citigroup reported bland fourth-quarter results. Earnings (excluding the effect of divestitures) were $1.10/share, which fell 45% from a year ago and were about 8% below the $1.19 consensus estimate. Revenues (excluding the effect of divestitures) rose 5% from a year ago and were about 1% above estimates.

Rising interest rates helped boost net interest income, but this was more than offset by higher credit costs and elevated transformation and other expenses. Citi’s already-healthy capital strength increased further. Overall, nearly two years into CEO Jane Fraser’s term, the bank is making progress with its turnaround. But, given the paltry 5.5% return on tangible equity compared to its medium-term goal of 11-12%, the bank has a long way to go.

In the quarter, net interest income rose 23% from a year ago, as the net interest margin expanded to 2.39% from 1.98% a year ago. Partly offsetting the higher margin, loans balances fell 2%. However, excluding to-be-divested Legacy businesses, loans grew 2%. Fee income fell 27% (ex-divestitures): better trading profits were more than offset by weaker asset management and investment banking fees.

Operating expenses rose 5% (ex-divestitures), which we find disappointing as we would like these to remain flat given all of the efficiency improvements underway. However, we recognize that with most turnarounds, expenses increase as the company spends on new staffing, software and other upgrades before it removes older costs, creating an expensive but temporary redundancy. This appears to be where Citi is today.

Credit costs surged to $1.8 billion compared to a negative ($465 million) a year ago. We view this sharp reversal as a return to more normal credit costs. Loan losses increased 36% but impressively were still below 0.2% of average loans. Non-accruing loans also remain low. The bank increased its reserves by a reasonable $593 million, compared to the unusual post-pandemic $1.2 billion reduction a year ago. Total reserves are now 2.6% of total loans, a size we consider healthy. In the credit card segment, reserves are 7.6% of these loans, also robust even as the economy slows. For perspective, the credit card portfolio is about 23% of total loans – indicating that this bucket is a sizeable driver of Citi’s growth and profits.

Citi’s capital of 13.0% (using the CET1 ratio) is sturdy, particularly when combined with its 2.6% credit reserves. However, despite this strength, the bank has no immediate plans to repurchase shares given the macro and market exit uncertainties.

For 2023, the bank expects revenues to increase 5%, coming almost entirely from higher fee income as it anticipates minimal improvement in net interest income. Expenses will increase 7%, with credit costs continuing to normalize (increase). Overall, 2023 will likely be an uninspiring year for profit improvement at Citigroup. We see stronger results in 2024, as the benefits of the turnaround become clearer. Exits of the legacy businesses in Mexico, Asia, Russia and Poland are underway and likely to be mostly done by year’s end or so.

The president of Mexico is to meet with Citigroup CEO Jane Fraser regarding the planned sale of Citi’s Mexico retail operations, although neither a date nor a location has been set yet. Insights into the purpose (support or dissuade a deal) or outcome of the meeting aren’t generally available.

This past week, the yield spread between the 90-day T-bill and the 10-year Treasury bond, which approximates the drivers behind Citi’s net interest margin, was essentially unchanged at negative 112 basis points (100 basis points in one percentage point). This spread is the widest since at least the early 1980s. Our interpretation is that investors are assuming that the Fed rate hikes and other macro drivers will drag inflation down to sub-5% or less this year. Given that the inflation metrics are flattening out or declining (inflation over the past four or five months has been tame at sub-3%), this assumption seems reasonable.

Citi shares trade at 63% of tangible book value and 8.4x estimated 2023 earnings. The remarkably low valuations assume an unrealistically dim future for Citi.

Citi shares fell 1% in the past week and have 65% upside to our 85 price target. Citigroup investors enjoy a 4.0% dividend yield.

When comparing Citi shares with a U.S. 10-year Treasury bond, Citi offers a higher yield (4.00% vs 3.55%) and considerably more upside potential (65% according to our work vs. 0% for the Treasury bond). Clearly, the Citi share price and dividend payout carry considerably more risk than the Treasury bond, but at the current valuation, Citi shares would seem to have a remarkably better risk/return trade-off. BUY

Gates Industrial Corp, plc (GTES) – Gates is a specialized producer of industrial drive belts and tubing. While this niche might sound unimpressive, Gates has become a leading global manufacturer by producing premium and innovative products. Its customers depend on heavy-duty vehicles, robots, production and warehouse machines and other equipment to operate without fail, so the belts and hydraulic tubing that power these must be exceptionally reliable. Few buyers would balk at a reasonable price premium on a small-priced part from Gates if it means their million-dollar equipment keeps running. Even in automobiles, which comprise roughly 43% of its revenues, Gates’ belts are nearly industry-standard for their reliability and value. Helping provide revenue stability, over 60% of its sales are for replacements. Gates is well-positioned to prosper in an electric vehicle world, as its average content per EV, which require water pumps and other thermal management components for the battery and inverters, is likely to be considerably higher than its average content per gas-powered vehicle.

The company produces wide EBITDA margins, has a reasonable debt balance and generates considerable free cash flow. The management is high-quality. In 2014, private equity firm Blackstone acquired Gates and significantly improved its product line-up and quality, operating efficiency, culture and financial performance. Gates completed its IPO in 2018, with Blackstone retaining a 63% stake today.

There was no significant company-specific news in the past week.

GTES shares rose 2% in the past week and have 8% upside to our 14 price target. At the current price and based on estimated 2023 results, the shares offer a 9% free cash flow yield (free cash flow divided by market cap). This is a discount to what the company is worth. BUY

Molson Coors Beverage Company (TAP) is one of the world’s largest beverage companies, producing the highly recognized Coors, Molson, Miller and Blue Moon brands as well as numerous local, craft and specialty beers. About two-thirds of its revenues come from the United States, where it holds a 24% market share. Investors worry about Molson Coors’ lack of revenue growth due to its relatively limited offerings of fast-growing hard seltzers and other trendier beverages. Our thesis for this company is straightforward – a reasonably stable company whose shares sell at an overly discounted price. Its revenues are resilient, it produces generous cash flow and is reducing its debt. A new CEO is helping improve its operating efficiency and expand carefully into more growthier products. The company recently reinstated its dividend.

There was no significant company-specific news in the past week.

TAP shares rose 3% in the past week and have 33% upside to our 69 price target. The stock remains cheap, particularly on an EV/EBITDA basis, or enterprise value/cash operating profits, where it trades at 8.6x estimated 2023 results, still among the lowest valuations in the consumer staples group and below other brewing companies. BUY

Organon & Company (OGN), a spin-off from Merck, specializes in patented women’s healthcare products and biosimilars, and also has a portfolio of mostly off-patent treatments. It may eventually divest its Established Brands segment. The management and board appear capable as they work to boost internal growth augmented by modest-sized acquisitions. The company produces robust free cash flow, has modestly elevated debt and pays a reasonable dividend.

There was no significant company-specific news in the past week.

OGN shares fell 7% in the past week and have 54% upside to our 46 price target (using the same target as the Cabot Turnaround Letter). The shares offer an attractive 3.8% dividend yield. BUY

Sensata Technologies (ST) is a $3.8 billion (revenues) producer of nearly 47,000 highly engineered sensors used by automotive (60% of revenues), heavy vehicle, industrial and aerospace customers. About two-thirds of its revenues are generated outside of the United States, with China producing about 21%. Investors undervalue Sensata’s durable franchise. Its sensors are typically critical components that generally produce high profit margins. As the sensors’ reliability is vital to safety and performance, customers are reluctant to switch to another supplier that may have lower prices but also lower or unproven quality. Sensata has an arguably under-leveraged balance sheet and generates healthy free cash flow. The relatively new CEO will likely continue to expand the company’s growth potential through acquisitions. Electric vehicles are an opportunity as they expand Sensata’s reachable market.

Sensata reports earnings on Tuesday, January 31, with the consensus estimate of $0.88/share.

ST shares were flat in the past week and have 62% upside to our 75 price target. Our price target looks optimistic in light of the broad market sell-off, but we will keep it for now, even as it may take longer for the shares to reach it. BUY

*Note: DOW price is based on April 1, 2019 closing price following spin-off from DWDP.

Buy – This stock is worth buying.
Strong Buy – This stock offers an unusually favorable risk/reward trade-off, often one that has been rated as a Buy yet the market has sold aggressively for temporary reasons. We recommend adding to existing positions.
Hold – The shares are worth keeping but the risk/return trade-off is not favorable enough for more buying nor unfavorable enough to warrant selling.
Sell – This stock is approaching or has reached our price target, its value has become permanently impaired or changes in its risk or other traits warrant a sale.

Note for stock table: For stocks rated Sell, the current price is the sell date price.

Current price is yesterday’s mid-day price.
CSCO: Estimates are for fiscal years ending in July of 2023 and 2024