A money manager with a leading expertise in value investing, John Buckingham — the editor of The Prudent Speculator — finds select opportunities across all industries, including these two recommendations in the tech sector.

Cisco Systems (CSCO) earned $0.84 per share in fiscal Q2 2022 (vs. $0.81 est.). The communications equipment firm had total revenue of $12.72 billion, versus the $12.66 billion estimate. The forward-looking comments by management cheered investors and analysts.

Cisco had product revenue near $9.35 billion (vs. $9.20 billion est.) and service revenue near $3.37 billion (vs. $3.45 billion est.) and an adjusted gross margin of 65.5% (vs. 64.3% est.).Cisco expects revenue growth between 5.5% and 6.5% for fiscal 2022 (vs. 5.9% est.), which should result in adjusted EPS between $3.41 and $3.46 (vs. $3.42 est.).

For fiscal Q3, CSCO expects revenue to grow between 3% and 5% with adjusted EPS of $0.85 +/- $0.01 and a gross margin between 63.5% and 64.5%. The company also increased its share buyback authorization by $15 billion to a total of $18 billion and raised the quarterly dividend payment by a penny to $0.38 per share.

As a result of supply chain challenges, the backlog exceeds $14 billion and includes hardware and software bundled with the hardware. In response to an analyst question about the estimated time to clear out the backlog, Mr. Robbins said that the supply chain issues didn’t get worse or better in fiscal Q2 and that there’s no “great timeline” for clearing it up.

Cisco has raised prices, but the lag between announcement and implementation on the customer side means that the impact is a while off. CSCO had a tough Q1 for sure, and we were glad to see this quarter’s print come in much stronger.

We continue to think that the company’s wares are best-of-breed, while management has made selective acquisitions to improve its offerings. Speaking of which, Cisco was rumored to be acquiring Splunk, a web-based software developer. Both companies denied the report and the rumored offer price was a vague “more than $20 billion,” which can mean anything.

Cisco sports a forward P/E ratio near 16 and a 2.7% yield. We continue to find CSCO to be a value-priced stock with decent long-term growth potential. Our Target Price has been boosted to $72.

Intel (INTC) recently hosted its annual Investor Meeting and, unfortunately, analysts, whose time horizon is generally measured in months and not years, were not impressed with the semiconductor giant’s turnaround plan.

Though the company has churned out plenty of net income and rewarded investors with generous dividend payouts in recent years, the analyst community disliked what they heard from CEO Pat Gelsinger and his team.

Indeed, they were highly skeptical of the keynote presentation that was full of plans so big the company will almost certainly come up short, even though Intel’s opinion was that, “None of the assumptions are heroic.” Intel also announced plans  to acquire Tower Semiconductor for $5.4 billion.

Intel has much to prove to regain investor favor, and while our patience isn’t perpetual, we were glad to see some positivity coming out of the Santa Clara-based chipmaker. Intel shares have been beaten up and the path forward looks bumpy, but the business opportunities are substantial.

Further, the company generates a ton of cash to enable the substantial investments needed, while we think a forward P/E ratio of 13 (based on profit estimates for 2022 that will arguably be a low water mark) is very reasonable as the market refocuses its valuation lens on businesses that actually make money.

Throw in a dividend yield of 3.2% and we think the total return potential over our three-to-five-year time horizon is sizable, even as we concede that Mr. Gelsinger’s bravado in suggesting that revenue should be growing 10% to 12% per year starting in 2025 or 2026 is likely a sizable stretch. Our Target Price for INTC is now $66.

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