A man walks past the Cisco logo at Mobile World Congress in Barcelona, Spain February 25, 2019.
Sergio Perez | Reuters
(This article was first sent to members of the CNBC Investment Club with Jim Cramer. To get real-time updates in your inbox, Sign up here.)
After you receive this email, we will sell 350 shares Cisco Systems (CSCO) for around $58.99. After the transaction, the Charity Fund will own 1,650 CSCO shares. Cutting our share of CSCO will reduce our share of the portfolio from about 2.86% to about 2.37%.
Shares of Cisco Systems were trading steady and were down slightly Monday after JPMorgan removed the stock from its Analyst Focus List. JPMorgan continues to maintain its excess levels, as it sees a “favorable outlook” fueled by the recent recovery in Enterprise IT spending and the long-term benefits of a paradigm shift. subscription business model and software. However, analysts omitted the company’s AFL because Cisco is “more sensitive to short-term supply trends, with a diversified product portfolio, limiting the short-term catalyst for the stock.”
We are quite concerned about CSCO because it is the type of stock that can perform in this market. Cisco is the opposite of an unprofitable, high-flying “concept” company that could be knocked down as the Federal Reserve tightens and tightens. It is high quality, generates cash flow and is profitable. Stocks also trade at inexpensive price-to-earnings multiples. The 2.50% dividend yield provides a layer of support to the stock price and compensates investors for their patience. And the long-term fundamentals are positive given Cisco’s exposure to growing trends in enterprise IT and software spending.
But while we like the ethos of the company and the stock, we believe it is prudent to undercut our positions and take profits on relative strength today. We think JPMorgan is correct in their assessment of the lack of short-term catalysts, and how long the supply chain constraints persist is up for debate.
We don’t think CSCO sold as it plummeted to the low $50s after earnings last month, but we’re ready to sell some stock now that the stock has recovered its losses. after earnings and recovered back near 52 – the highest level of the week. The return from this tranche will be approximately 11% on the shares purchased in June 2021.
Stock and company-specific reasons aside, we don’t think it’s harmful to raise a little extra cash following recent strength in major indexes, although most of the gains have come from a handful of stocks. Oversold conditions and the possibility of a Santa Claus rally are still fresh on our minds, but traders and investors should prepare for what could be a hawkish statement. and more sharply during Wednesday’s FOMC press conference. This sale would bring the portfolio’s cash position to about 7.25% from 6.75%.
CNBC Investment Club is now the official home of My Charity Foundation. It’s where you can see every move we make to our portfolio and get insight into my markets before anyone else. The charity and my articles are no longer affiliated with Action Alerts Plus in any way.
As a subscriber to the CNBC Investment Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Typically, Jim waits 45 minutes after sending out a trading alert before buying or selling a stock in his charity portfolio. If a trade alert is sent before the market, Jim waits 5 minutes after the market opens before taking the trade. If a trade alert is given less than 45 minutes during the trading day, Jim will execute the trade 5 minutes before the market closes. If Jim had talked about a stock on CNBC TV, he would have waited 72 hours after issuing a trading warning before taking a trade. See here for investment disclaimer.
(Jim Cramer’s charitable foundation is called CSCO.)
https://www.cnbc.com/2021/12/13/were-trimming-our-position-in-this-networking-name.html We are cutting our place in this network name