Despite all of Wall Street's conflict and contention, a fortunate few companies enjoy unanimous support among professional analysts. If the market's movers and shakers all believe these companies will beat the long-term averages, well, surely they will -- right?
Not so fast! With help from the 180,000 members of Motley Fool CAPS, we'll see whether these high-flying favorites deserve analysts' unwavering support.
CAPS Rating(out of 5)
CAPS Bullish Sentiment
No. Wall Street Analysts
52-Week Price Change
Aruba Networks (NAS: ARUN)
Cisco (NAS: CSCO)
Ship Finance International (NYS: SFL)
Source: Motley Fool CAPS.
As you can see, there's a wide range of results so just because Wall Street loves ' em doesn't mean you have to. Use the list as a jumping off place for your own research.
Hitting the gas
View it as trying to turn around a cruise ship: you don't pivot, but rather the course changes over a wide arc that initially takes you further away from where you want to go. Ultimately, though, you head in the other direction. Such is the case with Cisco. As it's recent first quarter results indicate, Internet equipment maker reached its apogee and is now steaming back to growth.
Sales grew 5% as its video and collaboration businesses strengthened, seeing 13% and 12% growth, respectively. Still it wasn't enough to offset the weak routing and switches lines, which are still the mainstay of the company and comprise more than half its revenues. The biggest driver of lower revenue there was government belt tightening at the federal and state level, which led to lower sales.
Cisco has been losing market share to rivals like F5 Networks (NAS: FFIV) and Riverbed Technology (NAS: RVBD) , both of which have been posting strong numbers themselves. Aruba Networks has also been encroaching on Cisco's turf as the wireless network equipment maker gained prominence securely linking mobile users of smartphones, notepads, and notebook computers to wired networks.
As mobile devices proliferate, Aruba says it will continue to grow as consumers bring their devices to work. The need for security across networks helped drive revenues 44% higher this quarter generating adjusted profits in line with analyst expectations.
Still analysts have raised their outlook 5% for Cisco's second quarter increasing their consensus EPS estimates to $0.43 a share, which is the midpoint of the equipment maker's own guidance of $0.42 to $0.44 per share.
That could help explain why CAPS All-Star members have an even higher opinion of Cisco than the broader community. As one of the most-rated stocks on CAPS, it's time you added your voice to the Cisco CAPS page, then see if it can steam back to port without hitting an iceberg by adding it to your watchlist.
And follow along to see how well Aruba continues its own growth arc by adding the stock to the Fool's free portfolio tracker.
Not discounted enough
There was some bold talk from Ship Finance International that there was no wiggle room in its contracts for clients to renegotiate, so Frontline (NYS: FRO) could fulminate all it wanted about changing its charters but even though it's one of Ship Finance's biggest customers it wasn't going to happen.
Well it seems Frontline took it up a notch itself, saying if conditions in the industry didn't improve soon, it just might run out of money. That caused Ship Finance's stock to sink and swamped the CAPS Oil & Gas Shipping sector, which dropped 7% yesterday. Frontline and Ship Finance were naturally the two biggest losers in the sector, plummeting 41% and 23% respectively, but even dry bulk shippers like DryShips (NAS: DRYS) and Diana Shipping were sent lower.
The same glut that's washing over the oil tanker market is dragging the dry bulk market down too and the fear is that bulk shippers could start to run aground on the shoals as well.
Ship Finance will be reporting earnings this morning, so the Frontline announcement will likely be a hot topic covered. Analysts have been expecting its profits to fall this quarter, but Ship Finance has had a knack of undershooting those predictions.
CAPS members like NagaTikus like the oil shipper's high yielding dividend, currently paying out at a rate north of 11%, in high yields there's often high risk. Of course a low yield is no guarantee of safety -- Frontline's dividend yields just 1.5% -- but investors need to beware of the dangers associated with chasing yield.
Add Ship Finance to your watchlist to see whether it can navigate these rough waters, and see what investors are saying by heading over to the Ship finance International CAPS page.
Agree to disagree
It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.
Sign up today for the completely free service, and tell us whether these stocks deserve to have Wall Street marching lockstep.
At the time thisarticle was published Fool contributorRich Dupreyowns shares of Cisco Systems, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Cisco Systems. The Fool owns shares of and has created a bull call spread position on Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Riverbed Technology and Cisco Systems.Motley Fool newsletter serviceshave recommended writing puts in Riverbed Technology. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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