Cisco Systems has become “very relevant” once again, this investor says

Networking company Cisco Systems (Cisco Systems Stock Quote, Chart NASDAQ:CSCO) has gone from being a “Remember them?” player in the dot-com era to now a solid growth engine that’s playing a significant role in the 5G revolution.

That makes it a strong prospect for investors over the next few years, says Gordon Reid, CEO of Goodreid Investment Counsel, who likes the turnaround accomplished by Cisco CEO Chuck Robbins.

“My guess is that it’s going to do quite well relative to market,” said Reid, in conversation with BNN Bloomberg on Thursday. “They’ve taken an old technology company and through their new CEO Chuck Robbins have reinvented themselves and done a very fine job. They are now a leader in 5G infrastructure.”

“John Chambers did a great job in building this company through the last iteration, in the late-90s when the tech bubble was being built, and Cisco was front and centre on switches and routers. Then they went a little bit dormant through a decade or so and then Mr. Robbins came along and basically reinvented this company into what it is today, a very relevant technology company for 2019,” he says.

As the trade war heats up between the US and China, Cisco is emerging as a safe stock to own in the tech field due to its limited exposure, as only three per cent of its revenues are in China. This week JP Morgan came out recommending Cisco, calling it a “relative safe haven in this macro backdrop catalyst.”

The fact that the company pays a substantial dividend with a 2.6 per cent yield doesn’t hurt, either. Year-to-date, Cisco is up 21 per cent, while over the last five years the stock has gained 113 per cent.

“We don’t own it but we like it very much and think that it’ll be higher in three years,” says Reid.