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Inside Wall Street


Cisco Rides Again

At the peak of tech fever in 2000, Cisco Systems (CSCO), the largest global provider of Web networking gear for transporting data, voice, and video, crested at 82 a share. After the bubble burst, Cisco stock drifted lower for almost a decade, to 13.62 this March. Now it's at 23.02, and some bulls believe the rebound will continue.

Investors shouldn't ignore Cisco's big role in "riding the wireless-data wave—the surging demand for more data and devices by users everywhere," says Karl Mills, who heads top-ranked Counterpoint Select Fund (CPFSX). Mills believes the number of electronic devices that feed on data will continue to grow. "We invest in companies that gain from this data wave, such as Cisco," he says, which supplies products such as routers and switching devices connecting and managing communications among local and wide-area computer networks. Cisco has also forayed into consumer markets.

Trading at 17 times the fiscal 2010 earnings estimate of $1.30 a share and holding $25 billion in cash net of debt, Cisco is an attractive long-term investment, says Mills, who values it at 30. Matthew Robison of Wedbush Morgan Securities says Cisco's new Net routers "could drive more rapid long-term growth." He has upgraded Cisco to outperform from neutral. For 2011, Robison sees Cisco earning $1.53 a share.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Lining Up for Chipotle

Some Wall Streeters may not be hot on Mexican food, but investors are ravenous for shares of Chipotle Mexican Grill (CMG). It operates 837 fast-casual restaurants in 33 states serving tacos, burritos, and salads made with fresh ingredients. McDonald's sold its 91% stake in Chipotle in 2006. Chipotle hit 80.17 on Oct. 28, up from 36 last Nov. 21. "We were encouraged by strong third-quarter results," says David Tarantino of investment firm Robert W. Baird (it has done banking for Chipotle), who rates it outperform.

Management projects flat sales for 2010, but Tarantino says this may "prove conservative." He urges investors to "buy into any weakness in the stock." His 12-month target for Chipotle is 115, based on improved restaurant traffic and cost-efficiency.

Dominic Silva of Value Line (VALU) says the stock is a timely buy and lauds its operating margin of 26%.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

These Machines Are Humming

John Bean Technologies (JBT), spun off by FMC Technologies (FTI) in July 2008, is a little-known leader in food-processing equipment and airline ground-support services. John Bean shares are taking off, leaping to 16.40 on Oct. 28, up from 5.85 last Nov. 20.

The company "has a well-established global base of customers, which translates into a big recurring revenue stream," says Al Cardilli of research firm Spin-Off Advisors. John Bean's food processing unit accounts for 61% of sales, and its AeroTech division, which makes aircraft-towing gear among other equipment, generates 39%. Gary Farber of CL King & Associates, rates the stock accumulate and says John Bean's machines sterilize over 50% of the world's canned foods, freeze more than 50% of its frozen foods, and squeeze 75% of its citrus. He expects earnings of $1.03 in 2009 and $1.14 in 2010.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.


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