Cisco is the picks and shovels business of our time and day

10 Apr 2023 · 2 min

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1:30

In this brief investment commentary, the speaker positions Cisco as an undervalued "picks and shovels" business that underpins modern data and networking infrastructure. He highlights Cisco's high return on invested capital (≈15%) and criticizes the market’s modest profit‑growth expectations (≈4% CAGR over ten years), arguing that historical performance and future demand for data, video, and connected devices will drive much stronger profit growth. The speaker uses a plumber analogy to stress the profitability of essential infrastructure providers. He concludes with a call‑to‑action inviting CFAs, financial advisors, and high‑net‑worth investors to join the Society of Intelligent Investors at newconstructs.com for deeper insights.

Chapters

Cisco is the picks and shovels business of our time and day. Cisco actually provides so much of the plumbing for data and network and all those kinds of things, and people just overlook it. But anyone who knows plumbers knows that they make a whole lot more money than you think. And the same is true with Cisco. They have a really high return on invested capital, 15%. The valuation implies that it's just going to grow profits 4% compounded annually over the next decade, and it's done a lot better than that in the past. And think about all the growth drivers, right? Do you want your phone to be faster? Are you going to take down more data or less? I think the answer to all those questions is you need to own Cisco because it's too cheap and it's going to be growing profits hand over fist as long as people are looking to consume more data, more video, more everything through devices, through distributed devices. Cisco is what makes that happen. It's the picks and shovels of the internet and digital age of growth. If you're a CFA, financial advisor, or high net worth investor who needs the truth about company Profitability and valuation? Click below and join us in the Society of Intelligent Investors by newconstructs.com. Join us. You'll sleep better at night.