Cisco : The Real Winners of 2018's Tech Boom

LONDON, September 18, 2018 /PRNewswire/ --

It's no secret: tech stocks are often the biggest winners on the market. But how does one spot a tech stock? Sure, there's the big heavy hitters - Apple, Amazon, Facebook - followed by dozens of hardware, software, crypto, blockchain, and app plays. Mentioned in today's commentary includes: AT&T Inc. (NYSE:T), NVIDIA Corporation (NASDAQ:NVDA), Fitbit, Inc. (NYSE:FIT), Cisco Systems, Inc. (NASDAQ:CSCO).

Tech stocks aren't for the faint of heart. What's up one day is down the next-booms and busts rock Silicon Valley practically every week. That's why it's so important to look past the hype.

Looking beyond the trendiest names in tech, investors can find the real winners-diamonds in the rough that might not strike investors as straight-forward tech plays, but which incorporate everything that makes tech so exciting, so vital and so necessary for every portfolio.

Here are five picks that showcase the range of options out there-along with some of the most exciting opportunities waiting to be grabbed:

#1 AT&T (NYSE:T)

This major telecommunications company has spent recent years transforming itself into a media company. AT&T has even acquired Time Warner and DIRECTV. The Time Warner deal, worth $85 billion, has made AT&T a media juggernaut. That's given it an online platform, HBOGO, to challenge emerging heavy-hitter Netflix.

AT&T has been spending like crazy, and its capex this year will exceed $25 billion. The payoff is this: the company is now a diverse tech stock rather than a telecommunications stock, and that diversity gives it flexibility.

Some of its new assets, such as HBO, are highly profitable and will only grow more valuable in the future. The company's underlying assets are based on mobile phone use, which is sure to remain strong (there's little chance of people abandoning their cell phones!).

Plus, this company has paid out a solid dividend to investors. AT&T stock may not be quite as valuable as some of the other heavy hitters, but it's a good one to have for investors looking for reliable returns.

#2 Cool Holdings Inc. (AWSM)

What's the world's most valuable company? That would be Apple, which set a new record this summer when it passed $1 trillion in value. The company reached such lofty heights thanks to its superb tech, its masterful marketing…and its groundbreaking retail.

Now, a piece of that retail market is being offered up to a tiny company, Cool Holdings, that will soon be seeking to profit from Apple's historic success. Apple Stores are the most profitable retail spaces in the world-they earn an average of $5,500 per square foot.

Cool Holdings has been granted a license to open up its own stores all across the U.S., to sell branded Apple products. It's already opened stores in Latin America, and its plan is to open up 200 stores across the United States by 2020, with an average floor size of 1200 square feet.

With a proven retail potential of $3,750, Cool Holdings' expansion could be worth a staggering $900 million-all for a company worth only $29.3 million.

Some say that retail is dead. But Apple revolutionized retail with the Apple Store, and now Cool Holdings is seeking to replicate that success with its One Click line of Apple co-branded stores. The idea is to bring Apple retail space to untapped markets, where Apple stores haven't penetrated.

Cool Holdings has raised $3.7 million to fund its expansion, and it has the full support of Apple Inc. But the company wants to do more than just sell Apple products. It is licensed to sell a range of high-tech products from Bose, Sonos, Moshi and Kanex.

These are seriously profitable brands. Bose alone nearly cracked Forbes' Top 100 and earned $3.8 billion in revenue last year. This is a real opportunity, one that is flying under the radar. Apple's vote of confidence in Cool Holdings shows how profitable this venture could be.

#3 NVIDIA (NASDAQ:NVDA)

Most have probably heard this story: a popular graphics-card manufacturer secures a chunk of market share and rides an explosion in computer sales to become one of the most valuable stocks in the world. Indeed, if one had purchased $1000 in NVIDIA stock ten years ago, it would be worth $11,000 today, an increase of 1000%.

NVIDIA manufactures computer chips, graphics' cards and other computer components. It's one of the biggest success stories of the last few years: the stock has out-performed most all competitors. And NVIDIA shows no signs of slowing down.

The company plans to roll out a new graphics processing unit (GPU) later this year that would act as a strong catalyst for the company's stock. The GPU will primarily be used in high-end gaming PCs, a niche market but one that NVIDIA has a strong hold on.

The company has suffered a set-back or two in recent days. Sales to crypto-currency miners fell way below expectations, as NVIDIA cleared only $18 million instead of the $100 million it had hoped for. Given the tumble in the price of Bitcoin, that wasn't much of a surprise. But the company has bounced back thanks to strong sales to data centers and GPU, which together account for 82% of NVIDIA's bottom line. Neither show any sign of slowing down.

Expect NVIDIA to follow on past years' success. This company will continue to succeed, thanks to its industry-leading position and its strong track-record.

#4 Fitbit (NYSE:FIT)

This tech company made headlines a few years ago when it released its signature product: a wristwatch that measured daily physical activity and athletic performance. Fitbit hit some headwinds last year as its competitors, including Apple, started releasing smart-watches that have eaten into the company's market share.

After a red-hot IPO, Fitbit's stock has tumbled, leading some to wonder if the company would be able to bounce back. Fitbit's active user base took a hit in 2017. Second-quarter 2018 revenue was below the level from last year, but Fitbit's fortunes seem to be improving: Q2 exceeded Q1 revenue by 21% and the average selling price of each unit has increased by 6%.

The company's Ionic and Versa smart-watches are strong sellers, and Fitbit management has claimed that the Versa outsells its competitors from Samsung, Fossil and Garmin in North America. Even if it can't rival Apple, Fitbit has carved out a niche in the smartwatch market, which now accounts for 55% of its total revenue.

Fitbit has 50 million registered users to tap for its smartwatches, and millions of old customers that dumped the company when fitness trackers went out of fashion are starting to come back. A turnaround in the company's stock could benefit investors who bought in when the price fell. Even if Fitbit doesn't recover fully to its lofty heights, this stock could emerge as a winner.

#5 Cisco Systems, Inc. (NASDAQ:CSCO)

Cisco officially got its mojo back in 2018. The year has been a great one for the company, with the stock rising by 25%, nearing an 18-year high and soaring above the S&P average. What's the secret of its success? Cisco has spent the last several years transitioning from traditional pricing to a subscription service, a model that's worked really well for Adobe and other software firms.

While dividends from Cisco have been disappointing, the increase in deferred revenue from subscribers' hints at stronger dividends to come. And this lines up with the company's stellar stock performance. In fact, performance has been so strong, and the outlook so positive, Piper Jaffray has pronounced Cisco a safer bet than Apple or Amazon.

This is early hype for a company that isn't on everyone's tech radar. The upside on the stock, despite the strong gains it's made in the last year, could be enormous.

By. Meredith Taylor

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