Sterne Agee’s Alex Kurtz has just issued his top picks for the second half of 2013 in the data networking and storage sectors under technology stocks. His top stocks to buy in the sector are Cisco Systems Inc. (NASDAQ: CSCO), CommVault Systems Inc. (NASDAQ: CVLT), Cray Inc. (NASDAQ: CRAY) and a company called Procera Networks Inc. (NASDAQ: PKT). What matters more than the end logic is the reason why, as well as how much upside there is in each of these tech stocks.
Kurtz said:
Despite demand challenges in EMEA, parts of U.S. Federal and APJ, we believe a handful of vendors are benefiting from focused end markets and manageable competitive landscapes and should be well positioned to execute in the second half of 2013. As such we continue to like shares of Cisco Systems, CommVault, Cray and Procera Networks.
Cisco Systems is rated as Buy, with a $26 price target. The firm’s channel checks suggest positive reseller booking trends, and Cisco shares have further opportunity for multiple expansion based on nine times earnings plus adjusted net cash per share of $5.57 per share.
CommVault Systems is rated at Buy, with a $88 price target, as being well-positioned to transition Dell Inc. (NASDAQ: DELL) business to other channel partners.
Cray is rated as Buy, with a large upside $25 price target, due to a major product refresh with the XC30 platform this year. It is in an attractive competitive landscape against International Business Machines Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ), and federal spending on security and cyber-intelligence should boost Cray.
Procera Networks is also rated as Buy, and it has upside of almost 60% if Stern Agee’s $23 price target is hit. Upcoming catalysts include 18 Tier 1 Trials, revenue recognition benefits, strategic Tier 1 wins in the second half and monetization of mobile networks as a secular opportunity.
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