Enterprise tech giant Cisco (CSCO) has outperformed the market in 2013, up about 20% year-to-date. But a look at the charts reveals an unfortunate history where CSCO stock tests the mid-$20 range, then winds up giving those gains right back.
Specifically, Cisco has had real troubles with the $26 mark, only hanging around for a couple weeks in 2010 and never consistently sticking there since the market’s historic highs in late 2007.
It might be time for a pullback yet again — and with just a 2.9% dividend, you can wind up losing much more in the next year than you make via dividends. After all, the fundamentals don’t give any reason for spectacular performance, with meager revenue growth of about 5% projected this year and next, and earnings growth that is similarly anemic.
Yes, CSCO faced very low expectations in 2012 and was a wise value buy at $16 a share. But those valuation arguments aren’t there anymore, and continued pressure in enterprise tech is hurting the stock as evidenced by recent underwhelming earnings.