CSCO – Artificial intelligence (AI) has become a buzzword. But, it may be deserving of the hype given the technology’s potential to disrupt various industries. Therefore, fundamentally sound AI stocks Cisco Systems (CSCO), STMicroelectronics (STM), and Belden Inc. (BDC) could be solid bets now.
Sep 30, 2021
Machines are getting closer to humans in terms of learning and thinking. Today, artificial intelligence (AI) can replicate many aspects of human intelligence. Given its potential, AI may be the next big tech phenomenon since enterprise software.
As several industries are adopting AI to automate tasks and processes, the global AI market is expected to grow at a CAGR of 21% during 2021-2025, with 56% of the growth contributed by North America.
Given the promising prospects of the AI market, fundamentally sound stocks in this space Cisco Systems, Inc. (CSCO), STMicroelectronics N.V. (STM), and Belden Inc. (BDC) could be solid additions to one’s portfolio.
Cisco Systems, Inc. (CSCO)
CSCO is a multinational corporation operating in the field of communications and Information Technology. It sells its services directly to consumers and through distributors. CSCO has an ISS Governance QualityScore of 1, as of September 26, indicating low governance risk.
On September 13, CSCO and Australian telecommunication company Telstra Corporation Limited (TLSYY) declared their collaboration in a five-year agreement to manage the IoT space. About this relationship, Masum Mir, Vice President, Mobility, Automation, and IoT Control CSCO, said, “Together we continue to empower autonomous industries and connected communities in Australia with smart infrastructure designed to support the future of connectivity with 5G.”
In August, CSCO released asynchronous video messaging solution Vidcast to create and share short video messages for effective communication in a team. The waitlist for the beta program has been opened to signups. This solution is expected to streamline communication within companies to ensure uninterrupted workflow, attracting customers for CSCO.
In the fourth fiscal quarter ended July 31, the company’s total revenue increased 8% year-over-year to $13.13 billion. Its non-GAAP operating income rose to $4.40 billion, indicating a 9.5% year-over-year increase. Non-GAAP net income increased 4.7% year-over-year to $3.55 billion, while non-GAAP EPS came in at $0.84, indicating a 5% increase from the same period last year.
The consensus EPS estimate of $3.43 for the current year (fiscal 2022) reflects a 6.5% year-over-year increase. Likewise, the consensus revenue estimate of $52.88 billion for the ongoing year indicates an increase of 6.1% from the prior year. Moreover, CSCO has an impressive earnings surprise history as it has topped consensus EPS estimates in all trailing four quarters.
The stock has gained 42% in the past year and 24% year-to-date to close yesterday’s trading session at $55.48.
CSCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CSCO has a Quality grade of A and a Stability and Sentiment grade of B. In the 55-stock Technology – Communication/Networking industry, it is ranked #3. This industry is rated B.
In addition to the POWR Ratings we’ve stated above, one can see CSCO ratings for Growth, Value, and Momentum here.
STMicroelectronics N.V. (STM)
STM designs, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company is headquartered in Geneva, Switzerland.
On September 29, in collaboration with Korean medical device manufacturer Nu Eyne, the company launched a new eye therapy device using STM’s wireless semiconductors. The new wearable therapy device is expected to deliver security and high performance with low power and gain STM a new value stream from the growing potential of wireless technologies in healthcare services.
On September 23, STM collaborated with European fashion house Paco Rabanne to introduce advanced contactless technology in Paco’s new fragrance launch. To give shape to this innovative idea demonstrates STM’s technological prowess and should aid the company’s further growth in the contactless technology space.
In the second fiscal quarter ended July 3, STM’s net revenues increased 43.4% year-over-year to $2.99 billion. Operating margin went up 1,120 basis points from the prior-year quarter to 16.3% of net revenues, while net income came in at $412 million, up 357.2% from the same period last year. EPS rose 340% year-over-year to $0.44.
Street EPS estimate of $1.93 for the current year (fiscal 2021) reflects a 60.8% year-over-year increase. Likewise, the real-time street revenue estimate for the ongoing year of $12.53 billion reflects an improvement of 22.6% from the prior year. Moreover, STM has topped consensus EPS estimates in three out of the trailing four quarters, which is impressive.
Shares of STM have gained 41.6% over the past year to close yesterday’s trading session at $43.34. STM has also gained 16.8% year-to-date.
STM’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A which translates to Strong Buy in our POWR Rating system. STM has a B grade for Growth, Value, Momentum, Sentiment, and Quality.
In the 97-stock, B-rated Semiconductor & Wireless Chip industry, it is ranked #4. Click here to see the additional POWR Ratings for Stability for STM.
Belden Inc. (BDC)
BDC is a signal transmission solutions company. The company designs and sells a diverse portfolio of network, security, and connectivity solutions and products across different markets.
On September 8, BDC announced that it will embark upon a roadshow stretching across the United States over 2021 and 2022, bringing its advanced solutions systems directly to designers and operators. About the roadshow, Chrissy Olsen, Global Director of Data Centers at BDC, said, “We’re looking forward to getting the Mobile Collaboration Center out on the road so we can meet with customers, showcase our innovative solutions, and start having collaborative data center design conversations.”
In August, BDC launched its new mini fiber cable solutions. The flexible and easy-to-install cables should be cost-effective and a viable, high-quality alternative to conventional cables. The new product might gain BDC a greater market share in the fiber cable market.
For the three months ended July 4, BDC’s adjusted revenue increased 41.9% year-over-year to $602.82 million, while adjusted gross profit went up 43% year-over-year to $215.24 million. Adjusted net income from continuing operations and adjusted EPS stood at $54.75 million and $1.21, up 169.3% and 163% from the prior-year quarter, respectively.
Analysts expect BDC’s EPS to increase 30% year-over-year in the next quarter (ending December 2021) to $1.17. The consensus revenue estimate of $601.64 million for the upcoming quarter reflects an improvement of 20.7% from the same period last year. In addition, BDC beat consensus EPS estimates in each of the trailing four quarters.
The stock has gained 92.6% over the past year and 43.3% year-to-date to close yesterday’s trading session at $60.03.
BDC has an overall rating of B, which equates to Buy in our proprietary POWR Rating system. The stock has a Growth grade of A and a Value and Sentiment grade of B.
BDC is ranked #16 out of 92 stocks in the B-rated Industrial – Equipment industry. Click here to see the additional POWR Ratings for BDC (Momentum, Stability, and Quality).
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CSCO shares were trading at $54.43 per share on Thursday afternoon, down $1.05 (-1.89%). Year-to-date, CSCO has gained 24.36%, versus a 15.90% rise in the benchmark S&P 500 index during the same period.
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More…
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