Why Investors Should Still Buy Cisco: Pros

Cisco stock has been on the decline following several disappointing quarters, but John Morris, managing partner at Crestwood Advisors, and Sarat Sethi, partner and money manager at Douglas C. Lane & Associates, agreed that this is a good time for investors to jump in.

“Cisco is a great long-term buy,” Sethi told CNBC.

“[Right now,] the value guys aren’t buying and the growth people aren’t buying so it’s stuck in the middle. The CEO has to refocus the business, which he is doing—he’s getting rid of the consumer businesses.”

Earlier this month, CEO John Chambers said that he had to make some "tough decisions" about cutting spending on some product areas, including its troubled consumer goods division.

Impressive Free-Cash Flow

Meanwhile, Morris said he is “impressed” with Cisco’s $8 billion in free cash flow and the firm’s ability to remodel the business.

“They’re paying a dividend now and they’re going to be doing some restructuring,” Morris said of the firm. “The company’s discounting very little future growth and it’s a good entry point in our view to start buying the stock.”

Morris’ other stock pick is Whirlpool .

“Most people assume this is tied to the housing market and our view is that they’re more of a global player in the emerging markets, particularly,” he said.

“They’re passing off their higher input costs to consumers and buyers and they’ve just raised their dividend for the first time in seven years—and it only trades at 10 times earnings.”

Scorecard—What They Said:

  • Morris' Previous Appearance on CNBC (April 8, 2011)
  • Sethi's Previous Appearance on CNBC (Apr. 19, 2011)

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Morris personally owns shares of WHR, CSCO and JNJ.

No immediate information was available for Sethi or his firm.