Jennifer Radman is vice-president and senior portfolio manager of Caldwell Investment Management. Her focus is U.S. large caps.
Cisco Systems (CSCO.O)
The company's valuation suggests there is still a fair amount of fear that Cisco's products face secular decline to white-label products. Cisco has recognized this threat and acted with a sense of urgency to adapt. Its margin performance and growth trends suggest it is executing successfully. We believe the fear continues to subside, unlocking meaningful upside in Cisco's shares.
Amdocs is a leading provider of billings and customer management services to telecommunications providers. The expansion of communication networks, the growth of mobile device categories, and an increasing amount of content has created an explosion in the number of billing strategies available to service providers. While the industry has already started using creative pricing to differentiate their service offerings (family bundles, paying for movie downloads, per-hour rates for faster downloads, for example), we see these as just the tip of the iceberg. Amdocs is a valued partner to service providers and benefits from this trend as they are a leading enabler of differentiated billing, with a reputation for strong execution on complex projects.
Broadridge Financial Solutions (BR.N)
Broadridge provides mission-critical investor communication and transaction processing solutions to the global financial services industry. The company is seeing growth from its clients' need to rethink and redesign their operations in response to regulatory requirements. This growth dynamic, coupled with the company's sticky/stable core business, makes this a compelling asset to own, especially in today's low-growth world.
Past Picks: August 13, 2015
Robert Half International (RHI.N)
Then: $56.50 Now: $40.80 -27.86% Total return: -26.49%
Then: $174.57 Now: $174.25 -0.18%% Total return: +2.13%
Cisco Systems (CSCO.O)
Then: $28.70 Now: $28.47 -0.80% Total return: +1.73%
Total Return Average: -7.54%
Macro factors seem to be the main driver behind markets this year, including changing expectations for how and when the U.S. Federal Reserve will proceed (or not) with raising interest rates. On the earnings front, corporations have struggled to grow revenue, but the trends have shown some stabilization this past quarter. The growth environment continues to be challenging, however, and we continue to stress the importance of a focused portfolio in a low-growth, higher-valuation market. This will not be "a rising tide lifts all boats'" environment, and as such, we believe investors will be best served with a focused investment strategy.