Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Good Stocks

Cisco Systems a Company with a Lot of Cash

If you like cheap stocks and companies that have a lot of cash, you will have to love Cisco Systems (NASDAQ: CISCO); the IT systems maker is currently swimming in the dough. It’s also very cheap; the company was trading at just $27.30 a share on October 6, 2015.

Interestingly enough, Cisco has some of the best numbers I’ve seen in a long time for both a company and an investment. Cash lovers and value investors had better take a look at this company.

Here’s what YCharts had to say about Cisco Systems on July 31, 2015:


  • A TTM revenue of $49.16 billion
  • A year to year TTM revenue growth rate of 3.93%
  • A diluted earnings per share figure of 1.733
  • A net income of $8.981 billion
  • A profit margin of 18.06%
  • A free cash flow of $3.818 billion
  • Cash and short-term investments of $60.42 billion
  • $12.55 billion in cash from operations
  • Assets of $113.48 billion
  • Sales estimates of $12.46 billion for the second quarter of 2015
  • Estimated sales of $50.71 billion for the current fiscal year

Cisco, which is not to be confused with food services company Sysco (NYSE: SYY), which is another great company, is also a pretty good investment. Cisco rewarded investors with a dividend yield of 3.01%, a payout ratio of 45.5% and a return on equity of 15.51%.


This is certainly a company for those who like cash because it has a lot of it. What’s more interesting is that Cisco Systems is also very much a value investment.

Why Cisco Systems Is a Value Investment

Cisco Systems is a value investment for a very simple reason. It is an infrastructure company: one of those great businesses that you do not see but is all around you, much like the pipeline and supply chain companies that Warren Buffett owns.

Cisco makes the network equipment that the Internet runs upon. Without it, Google Inc., Apple, Amazon, Netflix, Facebook and all the other sexy tech companies that Mr. Market seems to love would not have a business. There would be no Google searches, App Store, Amazon sales, Netflix, Facebook or data center. Actually, there would be no Internet at all.

This also makes Cisco a fairly safe investment because no matter what goes over the Internet, the net will need an infrastructure to run. Even if the architecture or content of the net changes drastically, Cisco will have a business.

If Internet business increases dramatically because people are suddenly downloading more movies, Netflix and Amazon will need more servers, which is more business for Cisco. Get the picture, folks; Cisco is a great way to cash in on the new dotcom bubble without taking the risk of over inflated stocks like Amazon and Netflix. When those issues come crashing back down to earth, Cisco will still be swimming in cash.


The amount of cash that Cisco has makes it something of a widow and orphans stock for the 21st century. It’s a fairly safe investment that steadily makes money, which provides a strong measure of safety.

If you’re looking for something to put in your portfolio that’s cheap, safe and fairly foolproof, take a look at Cisco. It makes a lot of money and attracts little attention, which makes it a true value investment. More importantly, it is one tech stock that you will not lose any sleep over, which makes it something of an anomaly in a very good way.