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Market Pros: Play These 4 Techs For Growth

Cisco led tech higher on Tuesday after CEO John Chambers said the company would begin paying a dividend between 1-2% for the first time in 2011.

However, investor enthusiasm may have been a bit premature. Research suggests that dividend payers in the tech sector underperform non-dividend payers substantially.

S&P 500 Tech Stocks
1-YEAR 3-YEAR 5-YEAR
Dividend Payers 2% -5% Unch
Non-Dividend Payers 21% -3% 2%

In fact, the Fast Money traders think the decision to pay dividends may be a sign that the growth story at Cisco is over. But it's not over everywhere. Not by a long shot!

How should you position, now?

Instant Insights with the Fast Money traders

I think the decision to pay a dividend is a sign the growth story for Cisco is over, muses Joe Terranova. Now it's time to think about Cisco as old technology. Although I like Cisco for the long-term if you’re a trader seeking growth you should look elsewhere. F5 or Riverbed are probably better growth stories.

For growth in this space, I’d look at Emulex or Qlogic , adds Brian Kelly.

Cisco had been dead money in recent years but the dividend could attract buyers and ignite the share price, explains Jon Najarian on the Halftime Report. A lot of the institutional investors may now find Cisco compelling.

Cisco’s dividend is the icing on the cupcake, adds Patty Edwards and I suspect we see more cupcakes getting iced in technology.

Like Patty, I also suspect the move pressures other big tech cash rich companies to pay dividends, adds Steve Cortes.

In the space, I'll be keeping a close eye on Apple, says Jon Najarian. With $45 billion sitting on its balance sheet I think pressure is mounting on Apple to do something with it. The stock could ramp over the next few weeks based on that speculation – as well as the other organic catalysts.

Read more: Beware Cisco: Tech Dividend-Payers Underperform

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TOPPING THE TAPE: H-P SHARES LEAD DOW

Elsewhere in tech, Hewlett Packard was among the best perfromers in the Dow, largely due to speculation that the company is close to naming its new CEO.

What’s the trade?

Officially, HP says they’re not going to name someone today, explains Jon Najarian on the Halftime Report, but I still think they’re very close.

I’m long Hewlett -Packard for the long-term, says Patty Edwards. It’s an attractively priced stock, right here.

I also find HP attractive, says Steve Cortes. The stock is over-hated and the fact they’ve made major acquisitions without a permanent CEO suggests their bench is very strong.

I agree that HP is cheap, says Joe Terranova, however in the space, I think the trade is longIBM .

It’s worth noting that IBM is hurling insults at HP, reminds Tim Seymour. CEO Sam Palmisano took several swipes at HP questioning everything from its acquisition strategy to its technology investment levels and its recent handling of the exit of former CEO Mark Hurd.

In this space, I like playing software, says Joe Terranova. I’d look at SAP and Oracle .

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NEW RECORD HIGH FOR GOLD

Typically a rotation into stocks bodes poorly for gold but not lately. On Tuesday gold made made a new record high with the precious metal now looking at gains of 15% in 2010.

What’s the trade?

I think the gold trade is too crowded, says Steve Cortes. I'd stay away.

Investment demand is driving gold right now and I’m a buyer, counters Brian Kelly. As long as China keeps buying, I like this trade.

If you look at the chart of gold over the last 10 years it’s the a buy and hold trade, muses Joe Terranova.

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BANKS GIVE UP BASEL BOUNCE

It appears the relief rally that occurred in the wake of Basel III is starting to fade. Bank of America, Citi and Wells all traded lower on Tuesday.

What’s the takeaway?

A bounce is nice, but at some point we need to see loan growth for these stocks to rally in a meaningful way, explains Karen Finerman.

In the wake of Basel III banks will either have to raise capital or reduce risk by buying Treasurys, adds Brian Kelly. I’m long the TLT because in the environment I believe bonds can go much higher.

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TO DIP OR NOT TO DIP?

With the market in a rut, are we headed for a breakout or a breakdown?

Hear why David Levy of The Jerome Levy Forecasting Center believes we’re looking at a 60% chance of recession in 2011.

Watch the video now!





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Trader disclosure: On September 14th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (BAC), (MSFT); Finerman’s firm owns (BAC); Finerman’s firm owns (GLW); Finerman’s firm owns (HPQ); Finerman’s firm owns (JPM); Finerman’s firm owns (IBM); Finerman’s firm owns (BBY); Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SWN), (SU), (SPLS), (RIG), (UPL); Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (ARST) calls; Jon Najarian owns (CSCO) call spreads; Jon Najarian owns (RHT) call spread; Cortes is short Crude Oil; Cortes owns (RIMM)

For Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SOLR)
Accounts managed by Kanundrum Capital own (RIMM)
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own Japanese Yen
Accounts managed by Kanundrum Capital are short Australian Dollar

For David Levy
***No Disclosures***

For Stephen Weiss
Weiss owns (CSX)
Weiss owns (UPS)

For Scott Nations
Nations owns MSFT

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)

For Patty Edwards
Edwards owns (HPQ) for clients
Edwards owns (MSFT) for clients
Edwards owns (BAC) for clients
Edwards owns (GLW) for clients
Edwards owns (GLD) for clients
Edwards owns (SPY) for clients
Edwards owns (VXX) for clients
Edwards owns (PGM) for clients
Edwards owns (C) for clients


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