• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Individual Investors Are Back! Trading Cisco: Market Recon

It seemed to happen overnight. People watched. People listened. People cared. About what? Individual stocks.
By STEPHEN GUILFOYLE
Dec 20, 2019 | 08:11 AM EST
Stocks quotes in this article: MRVL, ZUO, VIAC, CVS, UTX, SPLK, NVDA, MA, AAPL, ABBV, AGN, CSCO, BB, KMX, WGO

I've been waiting. For so long I had wondered. I had wandered. Sure there was the occasional "Hey, Sarge" from the other side of the subway platform, or the stray question that came from construction workers or drivers once they got me in the car, but mostly the people had become numb. When they would care once again? Would they care once again? There had once been a time when being introduced to new people, that once they heard "Steve works on Wall Street", there would be a pause.

After that pause, the new acquaintance would either quip "Got any tips?", or they would seriously ask about a stock they cared about, as if we can all answer intelligently any question about any stock. Only Jim Cramer can do that. That's why he bats clean up in our industry. The rest of us do not know something about every single stock.

The Fade Away

My point is that by 2019 it had been a long time since the average person gave a darn about Wall Street or about individual stocks. For the most part many folks, I believe, had received a financial punch in the nose in the late 1990's, and then again a decade later. Some were damaged beyond caring. Some went through a dulling of intellectual curiosity after passive style investment grew popular.

After having briefly felt important, those of us who grew up figuring out earned run averages for our whole little leagues and being accused by nuns of cheating on math tests because we could slow our brains down enough to show the work on math tests faded back into the background. By the way, teachers hate test sheets that show nothing but answers, even if you take the test in front of them in an isolated room.

Brain Dump

The point is that suddenly, and I mean this is like lightning, the folks are back. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all landed at record high closing prices on Thursday night. Yet again. A December, a year to remember.

I appeared on the Claman Countdown at the Fox Business Network on Thursday afternoon, the anchor... (the great) Liz Claman asked me what "one" stock I would like to own over the next 10n years. My mind raced. My brain dumped words that poured out. There are so many stocks that I want to own for so many good reasons. Just one? I rattled of a quick list including Marvell Technology (MRVL) , Zuora (ZUO) , ViacomCBS (VIAC) , CVS Health (CVS) , United Technologies (UTX) , Splunk (SPLK) , and Nvidia (NVDA) . That was non complete list by any stretch. These are all names that I trade in and out of.

I dug deeper, I thought about portfolio managers watching the show, I mentioned Mastercard (MA) for the steady double digit sales growth, for their traction in the business to business and international spaces, for their operating margin, for their relationship with the Apple (AAPL) Card, and for their large buyback program. At $297 a share though, that one might be tough on the retail investor, and the citizens are why I am here.

My mind then turned to AbbVie (ABBV) . Why? Simple. Retail investor affordability. The single digit forward looking valuation (PE), the 5.3% dividend yield, the way that management has identified the coming expiration of the Humira patent in 2023, and addressed this issue head on through the acquisition of Allergan (AGN) , which may close as soon as February... as a way to mitigate the negative impact to revenue and cash flow at that time. Everyone loves a fighter, at least I do.

Truly Stunned

I had spoken so fast, as my mind raced, trying to provide viewers with my honest opinion. I was not sure how it came off. My wife texted ... "you on drugs?" Of curse not, and I never have been. Then it happened. Twitter. Texts from others. E-mails from contacts. Then even phone calls.

The people care. Big time. I have not had a reaction like this to a television interview in quite some time. Viewers had apparently gone for something to write with when the interview began. When I spoke quickly, they could not get it all down. Others mentioned having DVR'ed the show. Relatives, asking about their stocks. Even financial advisers, just to chime in with their own opinion. It seemed to happen overnight. People watched. People listened. People cared. About what? Individual stocks.

Market top? Some might say. Then again, shouldn't the people care? Have some mostly missed an 11 year bull run due to fear, or an inability to save for so many of those years as the underlying economy struggled? Regardless, the individual is back, and they are focused. This may be a contrary indicator. Then again with the personal savings rate as a percentage of disposable income at sustained levels not seen since the early 1990's, there's a chance that retail investors are just getting started. What's that worth? I don't know, but I like it.

Corporate Funding

Anyone else notice the numbers released by Dealogic for investment grade U.S. corporations financing their credit needs in Europe, denominated in euros rather than in U.S. dollars? Year to date, these firms have tapped European debt markets for the equivalent of $129 billion in euros versus just $56 billion in 2018, and it makes a lot of sense doesn't it?

As I write this early morning love note, the U.S. 10 year note yields 1.94%, German 10 year paper yields -0.22%. The Fed is expanding its balance sheet through the purchase of short-term debt, T-Bills, meant to ease liquidity concerns, but not meant as an economic stimulant. The ECB is also expanding the balance sheet once again, after taking a hike for nine months. The ECB is trying to stimulate the economy in the single currency zone through the purchase of both sovereign and corporate paper.

This behavior is in no way wrong or unethical. This is simply solid corporate execution, that helps keep down borrowing costs, and likely improves gross margins. The danger might come in the taking down of more debt than appropriate due to the ease of access, and then at that point the music stops. Until then, have at it.

Not Rattled

At least not yet. On Thursday, the Department of Labor reported 234K initial jobless claims form unemployment insurance. A second consecutive week that this print landed well above expectations, moving the four week moving average for this data-point up to 226K. Don't get me wrong, I know that the labor market is still strong and that this particular item has printed below 300K (which used to be a big deal) for something like 249 consecutive weeks (don't quote me, I'm not actually counting), or close to five years.

What I do think might be noteworthy would be this week's print for continuing claims, a number that runs a week behind initial claims, and normally does not draw much attention. At 1.722 million, that line now stands at the highest level seen since August. The sky is falling? Not at all. Worth keeping an eye on? Certainly. With unemployment at incredibly low levels, any wiggle in trend will create questions concerning sustainability. Losing jobs means losing the consumer. Losing the consumer means everything.

Cisco Systems 

About a week and a half ago, we heard about the "Internet of the Future", the investor event where Cisco (CSCO) laid out their plans for new products around the national rollout of 5G technology. These plans would include new, more powerful routers, new networking silicon architecture to build those routers on, better optics, and improved software offerings.

On Tuesday, Barclays analyst Tim Long (5 stars) upgraded this name to Overweight from Equal Weight, while raising his price target from $47 to $53. Long based his change of heart on valuation and on the innovative changes that the firm announced back on December 11th. You may recall that back on December 12th, David Heger (also 5 stars) of Edward Jones also upgraded CSCO in the wake of that event.

One quickly sees that CSCO simply changed trend in response to it's investor day earlier this month after what had been really an unsustainable looking sell off. Relative Strength, the daily MACD, across many metrics the stock just looks better. This has not been one of my better names in 2019, but at least this recent move puts us back in the green.

- Target Price: $51 (initiation, had been $70 prior)

- Panic Point: $45 (just above net basis, not letting this one go red again)

Economics (All Times Eastern)

08:30 - GDP Economic Growth (Q3-F): Last 2.1% q/q SAAR.

08:30 - Personal Income (Nov): Expecting 0.3% m/m, Last 0.0% m/m.

08:30 - Consumer Spending (Nov): Expecting 0.4% m/m, Last 0.3% m/m.

08:30 - PCE Price Index (Nov): Expecting 1.4% y/y, Last 1.3% y/y.

08:30 - Core PCE Price Index (Nov): Expecting 1.6% y/y, Last 1.6% y/y.

10:00 - U of M Consumer Sentiment (Dec-F): Flashed 99.2.

11:00 - Kansas City Fed Manufacturing Index (Dec): Last -5.

13:00 - Baker Hughes Oil Rig Count (Weekly): Last 667.

The Fed (All Times Eastern)

No Public Events Scheduled.

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (BB) (.02), (KMX) (1.15), (WGO) (.62)

(Marvell, ViacomCBS, CVS, Nvidia, Mastercard, Apple, AbbVie, and Cisco are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Stephen Guilfoyle was Long MRVL, ZUO, VIAC, UTX, SPLK, NVDA, AAPL, MA, ABBV, CSCO equity. Short ZUO calls.

TAGS: Investing | Markets | Options | Stocks | Technical Analysis | Trading | Semiconductors & Semiconductor Equipment | Technology

More from Investing

The 10 Personality Traits of Successful Traders and Investors

James "Rev Shark" DePorre
Jun 25, 2022 10:00 AM EDT

Superior market players share these characteristics in their emotional makeup.

Does the Big Bounce Mean More to Come? Let's See What Drove the Move

James "Rev Shark" DePorre
Jun 24, 2022 4:42 PM EDT

Much of the rally can be attributed to structural reasons, not fundamentals, technicals, or even macro ones.

MongoDB Is Poised for a Rally

Bruce Kamich
Jun 24, 2022 2:15 PM EDT

Here's our initial upside price target for MDB which provides a general purpose database platform.

See That Down the Road? It's the Big 'Green' Bubble, Ready to Pop

Jim Collins
Jun 24, 2022 1:30 PM EDT

Environmental, social, and corporate governance has created a monster and gullible investors should hit the brakes on their EVs and run from the Washington technocrats while they have the chance.

Treat Becton, Dickinson and Company With Care

Bruce Kamich
Jun 24, 2022 1:25 PM EDT

BDX gets an upgrade, but are the charts healthy enough to recommend?

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:48 PM EDT PAUL PRICE

    More Insider Buying in American Woodmark (AWMD)

    American Woodmark , which I've discussed here fre...
  • 08:55 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The 10 personality traits of successful traders an...
  • 12:08 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    As a Portfolio Name Agrees to a Merger, Here's Our...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login