We have a favorable outlook on Cisco and its positioning to the recovery in Enterprise IT spending. The company recently reported 10% YoY order growth. This result represents the strongest demand the company has seen in nearly a decade, and it is being driven by substantial growth opportunities in hybrid work, digital transformation, and the cloud. In addition to positive industry trends, the company's ongoing transition from hardware to more software/subscription sales is a price-to-earnings multiple expanding opportunity. Not only does this transition expand margins, but the recurring nature of the sales also reduces the volatility of earnings. Cisco shares currently trade at ~16x forward earnings, representing a truly value technology/growth stock in the market, which will prove to be an important criteria in a tightening monetary period ahead. On top of being a value play, we like how management consistently returns a ton of cash to shareholders. Share repurchases are typical quarter after quarter, and the current stock price offers investors an attractive dividend yield ~ 3%. Management has increased its dividend payout for seven consecutive years and we believe they will continue on this streak for much longer. Cisco was named by Evercore ISI as a top pick in IT hardware and networking pick for 2022.

Target Price: $48, by applying a 10-year average of 13x forward P/E multiple to 2023 estimated earnings of $3.74/share.