Cisco vs Apple

Why Cisco is a Better Bet Than Apple


Over the last year, Cisco's stock has fallen by more than 30%. Apple's, in contrast, has risen more than 50% — breaking the $400 barrier, in fact, in after-hours trading Tuesday following its earnings report.

Maybe the better headline would be "The Beauty and the Beast."

... glamour stocks that are as popular as Apple's is today more often than not underperform out-of-favor stocks that are as unpopular as Cisco's.

This does not mean that Cisco's earnings or sales will necessarily grow at a faster pace over the next couple of years than Apple's. On the contrary, the historical pattern is for glamour stocks' earnings and sales to continue growing faster than those of out-of-favor companies like Cisco.

The reason to nevertheless bet on Cisco is that it's unlikely to grow as slowly as its depressed stock price is discounting, while Apple is unlikely to grow as fast as the market is assuming.

Comment: AAPL / CSCO

One problem I have with Apple is the absolute cost. 10 shares would be almost $ 4000!

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