Investors who want to buy Cisco stock should follow a few steps before hitting the button. Here is how to buy Cisco shares (CSCO) either as a short-term active trader or long-term investor.
What is Cisco
Cisco Systems was founded in December 1984 and has pioneered local area networks (LAN). The company became a multinational technology conglomerate corporation, focusing on manufacturing and selling networking hardware, software, telecommunications devices, and many other high-end technology products and services.
The company also specializes in providing safe internet access to retail users, strengthening the legacy of the conglomerate around modem access shelves and core GSR routers.
Headquartered in San Jose, California, Cisco have been the first to sell commercially successful routers to corporate institutions and to retail end-users, supporting multiple network protocols and racing to capture the emerging service provider market with their product lines.
Nowadays, though many acquired subsidiaries like OpenDNS, Webex, Jabber, and Jasper, Cisco has taken on specific tech markets such as the Internet of Things, domain security, and energy management.
Cisco Systems’ products and services focus on three market segments: the homes, small businesses, and enterprise & service providers, also known as the corporate market.
Items sold globally to these segments can range from routers, switches, wireless & security systems, WAN acceleration hardware, energy, and building management systems to storage networks, cloud computing, next-gen firewalls, call center systems, mobile apps, and even health infrastructure devices or operating systems.
Cisco also became a major provider of VoIP services (voice over IP) and is now slowly but steadily moving into the home user market.
Cisco is a publicly traded company, making its stock available to anyone of legal age interested in purchasing shares.
What are Cisco Shares (Nasdaq: CSCO)
Cisco shares represent a unit of ownership in Cisco Systems, Inc. – and they are among the world’s most popular financial instruments. Cisco shares will rise and fall in value according to how well the company is performing at a given moment in time. Better-than-expected earnings will make Cisco share prices rise, while weaker earnings will make share prices fall. However, there are many reasons why a company's share price can change.
People trade Cisco shares because, just like other financial instruments, they can be an opportunity to invest money. At a basic level, you can take a position on Cisco shares to get exposure to economic growth. If an economy is in good shape, you might find that companies operating in that specific economic branch or industry will grow too.
Company growth is correlated with share price increases, which is what people are hoping for when they buy Cisco shares.
On February 16, 1990, Cisco Systems went public with a market capitalization of $224 million at an IPO price of $18 per share. The 1990s were simply an amazing time for Cisco Systems. The company was able to do a stock split on an almost yearly basis so 1 Cisco share after IPO is equivalent to 288 shares today and a market price of $17.280 (September 1, 2021). Cisco shares have gone up with an annual rate of return of 15.29% (source: Yahoo Finance)
Cisco enter the 30 prominent companies listed on stock exchanges in the US and was added to the Dow Jones Industrial Average on June 8, 2009.
Cisco stock is traded on the Nasdaq stock exchange under the CSCO ticker.
If all that makes you want in on Cisco’s communications growth, here is everything you need to know to buy Cisco stock & shares to invest in CSCO.
How to Buy Cisco Shares
Learning how to buy shares may not sound complicated, but you will need to do some research — and learn the basics — before making your first investment.
- Learn the difference between investing and trading
- Review Cisco’s performance and outlook 2022
- Understand the risks and charges
- Choose your trading platform and place your orders
- Stay up to date with the latest news and rumors about Cisco
1. Learn the difference between investing and trading
People have two options to buy shares of stock online. Firstly, they can buy shares in companies on the exchanges where they are listed. For instance, you can buy Cisco stock on the NASDAQ exchange, so you own a share in the company (investor). Alternatively, they can buy Cisco shares without owning them, speculating on the price of the underlying asset (trader).
Investing and trading are similar terms that some people will sometimes use interchangeably – but there are significant differences for you to be aware of.
Investing in Cisco Stock
Investors buy Cisco shares hoping their price will rise and they can sell them later for a profit, adhering to the basic principle of buying low and selling high. Investors will take positions over a longer period, attempting to profit from share price changes as well as dividend payments.
While this means that they might need more initial capital to get started when compared to trading, their losses would be capped at this initial price tag. That said, investors should be aware they might get back less returns than they initially invested.
Investors will buy Cisco shares to:
- Make a profit from the Cisco share price rising
- Receive an income from dividends if the company pays them
- Benefit from the effects of compounding
This last point requires investors to hold onto their shares for an extended period. That’s why you’ll sometimes hear the phrase ”time in the markets is better than timing the markets” when talking about share investments.
>> Learn how to invest in stocks for beginners
Cisco (or any single stock, for that matter) can be a very volatile investment. You can lower the risk by diversifying your investment holdings.
An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund provides a broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.
CSCO currently makes up about 1.69% of the S&P 500, meaning 1.69% of each dollar you invest in an S&P 500 index fund goes to Cisco. If you want an index with an even larger CSCO representation, you might consider investing in a Nasdaq index fund, where Cisco accounts for 6% of holdings.
Automotive exchange-traded funds (ETFs) provide exposure to the performance of companies within the global automobile industry.
CSCO makes up 19.72% of XLY (Consumer Discretionary Select Sector SPDR Fund), 18.2% of CARZ (First Trust NASDAQ Global Auto Index Fund), 16.6% of SMOG (VanEck Low Carbon Energy ETF), 16.0% of QCLN (First Trust NASDAQ Clean Edge G).
>> Learn what ETFs are and how do they work
Trading Cisco CFDs
On the other hand, traders might seek to capitalize on short-term share price gains. Rather than investing in the shares, traders speculate on the shares’ value. They can speculate on it rising by going long, as well as falling by going short.
Trading Cisco stock means that you are speculating on a share’s price movements with derivatives like CFDs. In other words, you are purchasing Cisco shares without taking direct ownership.
Leverage is available when you use this product, giving you full market exposure for an initial deposit – known as margin – to open your position.
For example, a trader who wanted to buy 200 Cisco CFDs at $56 per share would only require $1,120 of trading capital, thereby leaving the remaining $4,480 available for additional trades.
But keep in mind that leverage can increase both your profits and your losses as they will be based on the full exposure of the trade, not just the margin requirement needed to open it. This means losses, as well as profits, could far exceed your margin.
With CFDs, you can ‘buy’ (go long) the shares if you think the Cisco stock’s price will rise, or you can ‘sell’ (go short) if you think the Cisco stock’s price will fall.
>> Learn what is CFD trading and how it works
Going Long Cisco CFD
Cisco has a sell price of $55.90 and a buy price of $56.00.
Cisco’s next earnings announcement is fast approaching, and you expect it to be good news. You think the company’s share price will go up, so you buy 200 Cisco CFDs at $56.00. This is the equivalent of buying 200 Cisco shares.
Because in CFD trading you can use leverage, you do not need to put up the full value of Cisco shares. Instead, you only need to cover the margin, which is calculated by multiplying your exposure with the margin factor for the market you are trading.
So, if Cisco has a margin factor of 20%, your margin would be 20% of the total exposure of your trade (200 share CFDs x $56 = $11.200), which is $2.240.
If your prediction is correct:
When Cisco announces its results, it is clear the company had a successful quarter – and as you had predicted, its share price climbs. You decide to close your position when it reaches $60, with a buy price of $60.10 and a sell price of $60.00.
You reverse your trade to close a position, so you sell your 200 CFDs for $60.
To calculate your profit, you multiply the difference between the closing price and the opening price of your position by its size. $60 – $56 = $4, which you multiply by 200 CFDs to get a profit of $800.
If your prediction is wrong:
Cisco’s results are worse than expected, and its share price immediately falls. You decide to cut your losses and sell your 200 CFDs at $54.
Your position has moved $2 against you, meaning you make a loss of $400.
Going Short Cisco CFD
Shorting with derivatives can be an effective way to protect your investments against downward price movements in your non-leveraged investment portfolio. Also, it can be a way to generate profits outright from shares that are falling in value. But when you go short, your potential losses are theoretically uncapped because there is no limit on how high a company’s share price can rise.
Here is an example:
Suppose Cisco shares are currently trading with a sell price of $60, and you think the price will go down. So, you decide to open a short CFD position on 200 Cisco shares CFD. A week later, the buy price reaches $50.00, and you close your position. This means you made $2000 in profit (60 - 50] x 200 = $2000), excluding additional costs.
If the price rises, you register a loss. For example, if Cisco shares rose to a price of $64, you would register an $800 loss instead, excluding additional costs.
When you create a trading account with CAPEX, you will be able to:
- ‘Buy’ (go long) or ‘sell’ (go short) Cisco and other 2,000 international shares to speculate on their price rising or falling
- Take a position on our range of ETFs to get exposure to a basket of shares from an entire country, index, or sector that could be rising or falling in price.
- Trade a host of global indices – including the S&P 500, the famous technology index NASDAQ 100, the Dow Jones Industrial Average (Wall Street), and the DAX (Germany 40) – to go long or short on the performance of an entire economy with a single trade.
- Use QuantX, the smart portfolio builder that helps you cover the popular industries and only invest in the top-performing stocks.
2. Review Cisco’s Performance and Outlook 2022
Before buying Cisco stock—or any stock (see our guide on how to buy shares)—it’s wise to do some research into the company’s financials, performance, and outlook. The easiest place to get started is through a company’s annual reports and quarterly reports. Public companies like CSCO are required to publicize detailed information about their financial health in these.
You can find these on Cisco’s investor relations site or by searching the Securities and Exchange Commission’s (SEC) database.
You may also turn to experts for their input. Brokerage companies frequently release commentary on major stocks and industries, and third-party evaluators like Trading Central provide comprehensive technical and fundamental analysis.
When you combine financial data with expert insight, you will be able to decide how much of your money you want to put into Cisco stock.
Cisco Forecast 2022 - Fundamentals
Before you load up the trunk with Cisco shares, pop opens the hood and see what you are really getting into. Remember, when you buy Cisco stock, you are purchasing a small portion of an actual business:
Cisco INC. designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China.
Cisco's balance sheet, income statement, competition, and management (all explained in our guide on how to research stocks) will help you give the company a good once-over.
You can access research, analyst ratings, and other key information about Cisco via your brokerage account or a financial information website. If you like what you see, your next step is to consider whether Cisco fits into your current investment portfolio.
- Cisco's market capitalization is $240.7 B
- Cisco's upward move is 52.1% in 1 year
- Earnings per share (EPS) are forecast to grow by 6.57% per year.
Even though Cisco has continued to grow with the strong increase in internet traffic, its reported revenues have been flat since 2014. This is due to Cisco's transition of its revenue model from that of a network equipment seller into a subscription and services company that generates recurring revenues.
The price-to-earnings ratio (PER) is 22.7, clearly overvalued over 280,3%. The analysts set up a stock fair value of around $83.55 which makes Cisco shares undervalued with 31.7% according to valuation.
*Last update: November 2021. Source: Yahoo Finance
CSCO's dividend has been stable for the last 10 years. CSCO pays a dividend of $1.47 per share. CSCO's annual dividend yield is 2.58%. Cisco Systems's dividend is lower than the US Communication Equipment industry average of 13.12%, and it is lower than the US market average of 4.32%.
Cisco Systems' next ex-dividend date is announced on Cisco’s investor relations site.
The Cisco dividend payout ratio is 51.21% based on the trailing year of earnings, 48.05% based on this year's estimates, and 45.82% based on next year's estimates. (source: NASDAQ)
Cisco Forecast 2022 - Chart Analysis
Technical traders analyze price charts to attempt to predict price movement. The two primary variables for technical analysis are the time frames considered and the technical indicators that a trader chooses to utilize.
Our web-trading platform, for example, offers 6 chart types (including the famous Japanese candlestick chart) to help you analyze price performance across different timeframes. It also enables you to deal in an instant – directly from the charts. You will be able to open, close and edit positions in just a couple of clicks.
Trading charts always feature distinct patterns that technical analysts can use to interpret the behavior of buyers and sellers. These chart patterns can give traders an indication of where the market could go next. As you will notice when you look at a chart, the market will usually move in one overall direction or trend. There are three types of market trends: uptrends, downtrends, and sideways trends.
From a technical perspective, after a period of wide-ranging movement from March to September 2021, Cisco stock has taken off strongly to the upside, driven largely by the better results published in the third quarter, until reaching new ones without finding levels of immediate resistance.
For a 2022 Cisco forecast look at the 52-week moving average that acts as a dynamic trendline and a target for a potential counter-trend that should keep the trend bullish.
On the daily chart RSI it is at overbought levels but showing no signs of divergence or exhaustion.
Buy Cisco shares or not?
It is recommended to watch for stocks at the major long-term support area. We should buy Cisco shares at relatively cheap prices (compared to historical values), not expensive prices. Also, have an exit plan for how you will exit a profitable trade. Define how and why you will exit. Since we used to support to get into the trade, you may consider exiting just below a long-term resistance level.
If buying at support, and planning to exit just below resistance, the upside potential should outweigh the downside risk by at least 2:1 or even 3:1. That means that if you buy Cisco shares at $50, you should be reasonably able to get out of the stock at $45 or higher. In an absolute worst case you lose $5 a share (but since we don’t hold losers forever, this is highly unlikely), but based on the historical chart it is quite feasible to go up to $10/share or more. This is known as the risk/reward ratio, a key indicator when deciding to buy Cisco shares or not.
With CAPEX WebTrader, you can perform an in-depth analysis of the charts with 90 indicators (including moving average, MACD, RSI, and Bollinger Bands). The platform also supports an interactive trading activity with high-end research tools helping you interpret market data.
3. Understand the risks and charges
Trading can be seen as riskier than investing due to leverage. But investing also carries a risk – and there is no guarantee that your investments would increase in value, so you could receive back less than you initially invested.
Before deciding to trade in shares, you should take steps to manage your risk. We have courses at CAPEX Academy that take you through risk management and how to mitigate your exposure to risk in the financial markets.
Our costs and charges for trading vary depending on the product that you use to take a position.
Cisco (CSCO) CFD Trading Conditions
|SPREAD PER UNIT||0.10 pips||LEVERAGE||1:5|
|OVERNIGHT ROLLOVER - LONG||-0.0076 %||OVERNIGHT ROLLOVER - SHORT||-0.0063 %|
|INITIAL MARGIN||20.0000 %||MAINTENANCE MARGIN||10.0000 %|
- Spread represents the difference between ASK price and BID price.
- Future Rollover adjustment consists of the difference in price between expiring contract and new contract as well as the spread of the CFD.
- Swap is the amount credited to or debited from an account where positions are held overnight.
- Inactivity fee represents the monthly amount deducted if no activity is recorded for 12 months in an account.
4. Choose your trading platform and place your orders
To buy Cisco shares CFD with CAPEX Webtrader is very easy and intuitive. Opening an online trading account is as easy as setting up a bank account. Here are the steps:
Open an account or log in
First, create an account or log in on capex.com. To open an account click the "Register" button and complete your details.
Once the platform is accessed, the registration process must be completed in order to operate with real money. Click "Complete the Registration and Start Trading".
To log in, from the CAPEX website, click on "Login".
Deposit funds into your account
To trade with a live account it is necessary to deposit funds. This is done from the platform itself by clicking on the "Add funds" button:
Also, it is possible to trade on a risk-free demo account with a balance of € 50,000, which is ideal for getting to know the platform and testing trading strategies.
CAPEX offers you different payment methods: debit cards, credit cards, bank transfer, skrill, and more.
It is noteworthy that CAPEX does not charge any fees or commissions for depositing funds.
Look for Cisco shares
To view Cisco shares (CSCO) real-time price and chart on the trading platform can click on the "Search" icon located in the left panel or by clicking on "Shares" and then select the instrument, in this case, Cisco.
Use the indicators and drawings to analyze the chart
Click the indicators icon and select your favorite ones. There are trend-following, oscillators, volatility, and support/resistance indicators available. To learn how many indicators to use and how to combine then visit the Technical Indicators section in CAPEX Academy.
Set up the order to buy Cisco shares
To buy Cisco shares CFD, click on the "Buy" button and a window is displayed to configure the purchase order:
The number of Cisco shares to be purchased must be entered and it is allowed to set up a Stop Loss to limit the potential loss, and/or a Take Profit to close a profitable position once the Cisco stock reaches a specific price. These orders can be configured based on price, pips, cash value, or percentage.
To proceed with the purchase, click on "Place Order".
However, CSCO trading does not end here. You will want to check out the next step to make sure you are investing your money as well as you can.
Why Trade Cisco with CAPEX?
- Advanced AI technology at its core: Whether they prefer the web-based and mobile-ready WebTrader or favor the highly popular MetaTrader 5, we make sure investors make effective use of fast and reliable trade execution speeds, complex order and risk management tools, advanced charting options, powerful research tools in collaboration with highly-regarded platforms such as Trading Central or TipRanks.
- Trading on margin: Providing trading on margin (up to 5:1 for individual equities), CAPEX gives you access to the stock market with the help of CFDs.
- Trading the difference: When trading Cisco CFD, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the Cisco stock price. Online trading with CFDs is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop loss, take profit, and apply trading scenarios aligned with their objectives.
- All-round trading analysis: The browser-based platform allows traders to shape their market analysis and forecasts with sleek technical indicators. CAPEX provides live market updates and various chart formats, available on desktop, iOS, and Android.
- Focus on safety: CAPEX puts a special emphasis on safety:
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- Global partnerships: CAPEX is proud to be the Official Sponsor of Juventus, one of the most prestigious football clubs in the world, a football club that has a special place in the hearts of the people of Italy, with a strong legacy and a dedicated community.
5. Stay up to date with the latest news and rumors about Cisco
Get the latest Cisco Systems (Nasdaq: CSCO) stock news and headlines to help you in your trading and investing decisions.
History of Cisco
In 1984, Cisco was founded by Sandy Lerner and her husband Leonard Bosack, both being Stanford University Graduates. Cisco's initial products have roots in the Stanford University computer science department. Both company founders used the technology on-campus to link all of the school's computer systems to talk to one another.
Fast forward to 1985, and they started working on a project to officially crate the Stanford campus network, adapting software that was initially written at Standford - by research engineer Yeager – and scaling it into the foundation for the Cisco IOS. One year later, the duo gets the license for the router software and two computer boards, paving the road for the formation of the Cisco team.
The company's name came from San Francisco and went public with a market cap of $224 million on February 16th, 1990, listed on the NASDAQ exchange. Cisco was not the first company to create and sell network nodes, but it was the first to sell routers with multiple network protocols commercially.
In 1992 and 1994, they acquired multiple companies in the segment of ethernet switching, building the business philosophy on the future dot-com bubble.
After the 2000 internet boom, the company became one of the most valuable internet pillars globally. It proceeded to rebrand into a household brand, a strategy designed to support low-end & consumer products.
Cisco started building a significant presence in India and expanding into new markets by acquiring and challenging competitors such as Alcatel-Lucent and Huawei.
After announcing a definitive agreement to acquire Sourcefire in 2013, the company announced poor revenue due to low sales in emerging markets, due to economic doubts and concerns of NSA about the company planting backdoors in the products.
Around 2015, Cisco reported that it would gradually exit the consumer market and focus on cloud-based products for corporate segments – also join the enterprise conglomerate OpenFog Consortium, alongside Dell, Intel, Microsoft, and other essential computing pillars.
Between 2015 and 2020, the company acquired software-defined businesses, strengthening its position in the cloud communication and collaboration area, videoconferencing, application performance, and many other corporate-related market segments.
For 2018, Cisco reported earnings of $1 billion, with annual revenue of $49.3 billion. The company focuses on bringing back capital invested overseas at a lower tax rate to fund share buybacks and acquisitions. As their investor website states, the computing pillar ended 2020 with an increase of 18% compared to the previous quarter. It developed a solid fiscal momentum in transforming the business by delivering more software and subscriptions, more so due to the impact of the pandemic.
As more and more companies seek to modernize their organizations for efficiency and resiliency, the company is well-positioned to accelerate the digital transformation in our society. For 2022, Cisco expects to achieve their estimated results of 5-7% growth year over year, with a 7.5 - 9.5% growth in the first quarter.
*Last Update: November 2021. Source: Wikipedia
Cisco (CSCO) Latest Stock News
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