The bad times are over for Cisco Systems (NYSE: CSCO). After a drop in early November (and late October), Cisco is primed for a nice future. This is the company that doesn’t lose money. They haven’t dropped an earnings estimate since I can remember and have seemed to grow under the radar ahead of their industry for decades. My bullish discounted cash flow valuation came up with a target price at $35, appropriate purchase price is around $28.

Wanna know why Cisco can’t miss? Because Cisco doesn’t miss. Their past present and future is laden with performance. For whatever reason, investors stopped believing in CEO John T. Chambers, one of the tops in the business, and a business they seem as just too big for sustainable growth. Well their ROIC has been over 18% for the past 5 years, hitting 23.95% YTD. Return on assests and equity are just as good, sitting at 15.17% and 26.27% respectively. What’s better? Their competitors go negative in growth, with the closest coming in with an ROA of 3.06% and an ROE at 7%. Oh and can you say cash flow? Cisco grows cash flow 30%+ year after year without taking on debt! This is a red flag for growth potential with low downside risk.

Competition? Don’t blink twice. Cisco has a virtual monopoly on the networking industry. They are the 4th largest computer hardware producer by sales ($36 billion), and absolutely trump Alcatel-Lucent (NYSE: ALU), the closest competitor by sales ($16 billion). Cisco owns Linksys, a lead producer of wireless/wired network solutions and Scientific-Atlanta, a leader in DVR technology. By tapping into emerging markets like the VOD (video-on-demand), VoIP (Voice-over-IP) and even Web 2.0 technology, Cisco has all but guaranteed their dominant market presence over the next five years. Sun Microsystems (NYSE: JAVAD) has numbers all over the map, and an ever-slipping foothold in the market, 3Com (NYSE: COMS) has given us some terrific numbers, but putting serious look into such na unpredictable firm spell trouble, and Juniper Networks (NYSE: JNPR), while producing awesome numbers on the books, hasn’t given us the returns we’ve wanted.

Take this one while you can get it, not every day can you find such a money-making juggernaut on sale like this. Surprisingly enough, P/E (price-to earnings) is the lowest in the industry! At just 17.3 forward, Cisco remains undervalued (approx 22 current P/E). One way or another, they’ve managed to hold the lowest P/E among competitors for about five years running. Wall Street analysts call for an outperforming quarter 19-to-0, the net fool is calling “outperform,” a recent $10 billion stock buyback by Cisco says that management is calling “outperform,” make your move!

-The Net Fool

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