The market continues to rebound from its steep selloff. With many of the most heavily sold names bouncing back the strongest, investors who look for slower-moving companies could see the best value here.
That’s because the market rally this year has been driven higher by just a few big-cap tech companies. Other companies are starting to show signs of catching up, and will likely end the year strong.
That means investors who buy during today’s market fears could see the best returns with less popular companies right now.
Computer hardware manufacturer Cisco (CSCO) is one such play now. While the company is best known for modems, they’re also an AI play thanks to rising demand for routing and switching technology.
Shares trade at 13 times forward earnings, making it look like a compelling value play, especially with news of a restructuring that could help push its valuation higher.
With earnings looking to rebound from their poor performance over the last year, shares could be on track for an end-year rally.
Action to take: Investors might like shares at current levels or on any market drop over the next few months. At current prices, Cisco pays a 3.5% dividend.
For traders, the October $50 calls, last trading for about $0.55, could see mid-double-digit returns or better, especially with Cisco likely to trend higher after its restructuring plan.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.