Sign in Subscribe
Software industry

Jim Cramer's Top Tech Picks for 2015: Cisco and Microsoft

Strategic Insights

— 2 min read

Jim Cramer's charitable trust has recently made trades in two of the biggest names in the technology industry: Cisco Systems and Microsoft. Cramer's trust has traded Cisco and Microsoft, which have been significant contributors to the Dow Jones Industrial Average's gains in 2014. In this article, we will take a closer look at each stock, starting with Cisco.

Cisco Systems has experienced significant growth in 2014, with a 24% stock gain catching investors by surprise. Analysts at Deutsche Bank have reiterated Cisco as a buy and raised its 12-month price target to $32 from $30, suggesting the stock can gain 15% from its current level around $27.80. The analysts cited Cisco's potential growth in areas such as data-center switching, advanced services, security, and wireless, which have the potential to deliver higher margins and help Cisco grow its profits at a faster rate.

Microsoft has also made significant strides in 2014, with a 24% stock gain. Under new CEO Satya Nadella, Microsoft has made Wall Street forget the lost decade under former CEO Steve Ballmer. Microsoft is making moves in fast-growing areas such as commercial cloud services, Office 365, and its cloud platform Azure, which has the potential to steal share from market leaders Amazon and Salesforce.com. Microsoft is betting big on these businesses, and this has begun to pay off, with each growing at a rate of more than 100%.

Key Takeaways:

  • Cisco Systems has experienced significant growth in 2014, with a 24% stock gain, and analysts at Deutsche Bank have reiterated the stock as a buy, with a 12-month price target of $32.
  • Cisco's potential growth in areas such as data-center switching, advanced services, security, and wireless has the potential to deliver higher margins and help Cisco grow its profits at a faster rate.
  • Microsoft has made significant strides in 2014, with a 24% stock gain, and is making moves in fast-growing areas such as commercial cloud services, Office 365, and its cloud platform Azure.
  • Microsoft is betting big on its cloud business, with each growing at a rate of more than 100%.
  • Cisco and Microsoft both pay a solid yield of 2.73% and 2.70%, respectively.
  • Both stocks have a price-to-earnings ratio of around 18.

Statistics:

  • Cisco Systems has a 12-month price target of $32 from Deutsche Bank analysts.
  • Cisco's potential growth in areas such as data-center switching, advanced services, security, and wireless has the potential to deliver higher margins and help Cisco grow its profits at a faster rate.
  • Microsoft has a 24% stock gain in 2014.
  • Microsoft's cloud business is growing at a rate of over 100%.
  • Cisco and Microsoft both pay a solid yield of 2.73% and 2.70%, respectively.
  • Both stocks have a price-to-earnings ratio of around 18.

Sources:

  • TheStreet (thestreet.com)
  • Deutsche Bank (www.thestreet.com/story/13009559/1/cisco-systems-csco-stock-higher-today-after-deutsche-bank-price-target-increase.html)
  • TheStreet (thestreet.com/story/12995581/1/these-5-stocks-look-toxic-for-investors-in-2015-deutsche-bank-and-more.html)
  • Jim Cramer's Action Alerts PLUS (secure2.thestreet.com/cap/prm.do?OID=028382)

Read more