Editor's note: As part of our partnership with PBS's Nightly Business
Report, TheStreet's Gregg Greenberg will appear on NBR Tuesday (check
local listings) to discuss what 2011 holds for Cisco and the rest of
tech.
NEW YORK (TheStreet) -- Technology has been a tough stock-market
sector to beat in 2010, and some fund managers expect more of the same
for next year.
The technology-heavy *Nasdaq* has risen 17.5% so far in 2010, compared
with a 12.8% gain in the *S&P 500 Index* of large-cap stocks and a
10.8% advance in the 30-member *Dow*.
"We expect corporations to [continue to] invest in technology, which
provide the biggest bang for the buck with productivity gains, and
consumers to keep spending on devices as we now view technology
gadgets as a necessity or way of life," says Channing Smith, manager
of the *Capital Advisors Growth Fund*(CIAOX). "Additionally, the
balance sheets of the majority of companies in this sector have never
been stronger."
Bryan Keane, a technology-equity analyst at *Alpine Mutual Funds*,
says: "Technology will be a stock-picker's market with continued M&A
activity as the larger players continue to consolidate the industry.
As has been the case in the past decade, large-capitalization stocks
continue to lag on a valuation basis. Select semiconductors and areas
such as cloud computing and smartphone-related products will continue
to be some of the winners."
TheStreet_ searched for 2011's top tech stocks with Keane and Smith.
*Cisco Systems*(CSCO)
Tech giant Cisco's third-quarter earnings report disappointed Wall
Street, but with the stock price down about 20% since then, investor
concerns are overdone, says Smith.
In his view, Cisco is not only building the networking infrastructure
for technology trends like mobile Internet, data-center
virtualization, cloud computing and streaming video, but also for the
trends that are coming such as the smart grid, RFID, virtual health
care and networks for energy efficiency.
"We are looking at a future where we will see hundreds of billions of
sensors and devices that will become connected over the next decade,
and Cisco should be in the middle of this network tsunami. Don't
forget Cisco is also participating in the emerging markets build-out
of their technology infrastructure, which is expanding and will
continue to grow faster than developed markets like the U.S. and
Europe," says Smith, who adds that the cash-rich company's stock
trades cheaply at under 12.5 times consensus earnings estimates for
2011.
Keane agrees, saying the company has underperformed this year but its
products are still at the center of a lot of hot trends in technology
such as cloud computing and mobile-data usage.
"We would expect an improvement in the business as we move through
2011," he says. "Plus, the company has discussed returning cash to
shareholders, which would be received positively by the market."
Source: Thestreet.com
