PowerTrends in Technology

02/26/2014 8:00 am EST

Focus: STOCKS

Chris Versace

Editor, PowerTrend Bulletin, Growth & Dividend Report, and PowerTrader

 

There are pockets of opportunity to be had, such as the intersection of mobile, the Internet, and computing, that are reshaping industries and business models around us, suggests Chris Versace, editor of PowerTrend Profits.

Amid the snow and ice, corporate earnings have been issued, and two of our holdings—Cisco Systems (CSCO) and Nuance Communications (NUAN) were part of that crowd. The results were pretty good, with both companies reporting better-than-expected earnings.

Although it cited near-term product transition issues and weak demand from the emerging markets, Cisco beat Wall Street expectations for the December quarter and guided the current quarter in line with existing forecasts.

Alongside that, Cisco bumped up its quarterly dividend by $0.02 per share to $0.19 per share—that's an annual dividend yield of 3.4%.

Rising dividends tend to move upside and downside in the shares higher, and that is what's happening in Cisco shares as the Internet of Everything gets underway. For now, the shares remain a buy at current levels.

After issuing an upside surprise a few weeks ago, Nuance reported better-than-expected quarterly results.

While the company continues to emphasize a growing number of mobile applications (automotive, healthcare), the business continues to transition to revenue recognition, from license to on-demand revenue. We've known about this for some time, and, as such, this is nothing new.

Quarterly bookings rose 26% year over year, far better than the 15% target laid out for the company at the start of this year, and that signals a rebound in demand for the company's voice-centric products.

Also, Nuance has about $296 million of its $500 million buyback authorization remaining; considering the current share price, compared to the company's average buyback price to date of $18.57, we could see more buyback action ahead of us.

Lastly, let's not forget about Carl Icahn, who now has two Board seats and an activist agenda. Nuance shares remain a buy at current levels.

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