They say you can't teach old dogs new tricks, but that hasn't been the case when it comes to tech lately. In fact, old tech names to the likes of Microsoft, Cisco and Hewlett-Packard have been some of the hottest trades of the year, and have outperformed the broader market.
But there's one name in particular that caught the eye of Oppenheimer's head of technical analysis Ari Wald: Cisco.
"We've liked big cap tech throughout the year. Intel, Apple, Microsoft, we've seen a lot of these old tech names breakout to the upside and our hunch is that Cisco could be the next old tech stock to do that."
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Oppenheimer, who has an "outperform" rating on Cisco, recently added the company to their S&P 500 Buy List. And according to Wald, the technicals have set the stock up for a potential breakout to $40 per share in the next six months, or roughly 60 percent higher than current levels.
"Looking back at the last few years, as much as broader stock market averages are surging out to new all-time highs, Cisco has been in a range," Wald pointed out on a chart dating back to the year 2000.
"[Cisco] has been in a range of $13 and $27, it's underperformed the S&P 500 by 40 percent since the start of the bull market. You know, relative to the market, it's actually getting back to the same levels it was at back in 2001."
When it comes to Cisco, Wald has one piece of advice: take advantage of the recent pullbacks as a buying opportunity.
"The stock is tremendously under owned. It's still trading at a discount compared to other large cap trend names," said David Seaburg of Cowen and Company.
But while Seaburg's firm has an "outperform" rating and $30 per share price target on Cisco, he sees some short-term disability for the company. "[Cisco] has struggled around the $26 level, getting through $26 has been a real hurdle for them. I do think long-term it's going to trend higher, but short-term it's probably going to languish here for a little bit and kind of trend right around this level. It's kind of a show me story from here."
Click on the video above to see the full discussion with Wald and Seaburg.