Question: JPMorgan Chase & Co (NYSE: JPM) posted a huge profit jump in the first quarter. Is now the time to buy?
Answer:
- JPMorgan is a strong financial company—in our opinion, it is among the top banks along with Wells Fargo & Company (NYSE: WFC), which we own.
- We do not currently hold it in our Traditional Portfolio because we already hold some really strong financial companies.
- We recommend buying it, if you do not already own other financials.
- The company recently raised their dividend to $0.25 a share.
- We feel JPMorgan was managed pretty well coming from the financial crisis.
Question: Cisco Systems, Inc. (NASDAQ: CSCO) is shutting down the Flip Camera, which it bought for more than half a billion a couple of years ago. Is this a sign of weakness? Is now the time to sell?
Answer:
- On one hand you have one of the best networking companies in the world, the backbone of the Internet, while on the other hand they are selling Flip Cameras.
- In our opinion, it does not match up—shutting down Flip was a plus;
- We want to see them build something the company currently offers, i.e., cloud computing, and
- Now you know why news of company purchases, generally, drives down the price of the acquirer’s stock.
- You have to ask: Is Cisco worth $13 a share, net of cash?
- Yes. They own 70% of the switches market and 50% of the router market, and
- Both markets are growing because the need for data is growing.
- However, we feel that the high growth days of the company are over, and management should be paying dividends to the stockholders.
- The company is sitting on billions in cash and not doing anything with it, and
- We feel they are a mature growth company and should begin acting the part.