The return to prominence of Cisco Systems Inc. (NASDAQ: CSCO) was not an overnight affair, but with the release of the networking giant’s most recent earnings, it is clear the company is back with a vengeance. It is also clear that what is good for Cisco is also good for companies that do business with it, and a new RBC report highlight companies that may stand to benefit.

The RBC team focused in on the technology supply chain companies that supply integral parts and services to Cisco. They also noted that demand is coming in much better than feared in the core switching and routing markets. While they are clear to point out that it may represent a “modest positive” for the companies, with everything full speed ahead at Cisco and the business diversifying fast, the real upside is probably a true unknown.

Here are the companies the RBC analysts think could directly benefit from improvement at Cisco, and all are rated Outperform.

Amphenol

This industry giant could not only gain business from Cisco, but others could step up to the plate. Amphenol Corp. (NYSE: APH) is one of the top picks this year at RBC, which sees the company benefiting from the Cisco strength as about 4% of total sales are to Cisco. Amphenol is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable. Amphenol designs, manufactures and assembles its products at facilities in the Americas, Europe, Asia, Australia and Africa and sells them through its own global sales force, independent representatives and a global network of electronics distributors.

ALSO READ: Cowen Very Positive on 4 New and Old-School Tech Stocks

While the RBC team sees the Cisco improvement as net-neutral for the company, they do note that Amphenol’s IT and data communication revenue increased in the June quarter, but was somewhat offset by networking and storage. They do model the IT and data communications business to grow as a result of the Cisco guidance.

Amphenol investors are paid a small 1% dividend. RBC has a $64 price target on the stock. The Thomson/First Call consensus estimate is $60.42. Shares closed trading on Thursday at $55.45.
Flextronics

This company has had an up-and-down year, but could hold good appreciation potential. Flextronics International Inc. (NASDAQ: FLEX) is rated Outperform at RBC and looks to be a winner from the Cisco gains. It is a leading end-to-end supply chain solutions company that delivers design, engineering, manufacturing and logistics services to a range of industries and end-markets, including data networking, telecom, enterprise computing and storage, industrial, capital equipment, appliances, automation, medical, automotive, aerospace and defense, energy, mobile, computing and other electronic product categories.

Flextronics is an industry leader with more than $26 billion in annualized sales. RBC sees the improvements at Cisco as a positive at the company, which does annually between 6% and 8% of sales via switches, routers and infrastructure equipment with Cisco. The analysts feel that the Cisco guidance takes down the threat of Flextronics guidance being overly aggressive and is a new positive for the company.

ALSO READ: 5 Top BioPharma Stocks May Have Sold Off Too Much and Become Bargains

The RBC price target on Flextronics is $14, and the consensus target is $12.29. The stock closed Thursday at $11.10.

TE Connectivity

This stock is down a whopping 15% in the past two months. TE Connectivity Ltd. (NYSE: TEL) designs and manufactures products at the heart of electronic connections for the world’s leading industries, including automotive, energy, broadband communications, consumer devices, health care and aerospace and defense. TE has a long-standing commitment to innovation and engineering excellence, which helps its customers solve the need for more energy-efficiency, always-on communications and ever-increasing productivity demands.

Many on Wall Street are bullish on the stock due to the increasing electronic content in automotive, industrial, consumer and defense industries. Analysts cite the stock’s very reasonable valuation and the high-growth auto sensor business helping to ramp up sales and earnings. While the company has a more modest exposure to Cisco in its communication segment, revenues did grow by 8% year over year. RBC sees this as a modest positive for the company.

TE investors are paid a solid 2.13% dividend. The RBC price objective is $80. The consensus estimate is $75.40. The stock closed Thursday at $61.85.

ALSO READ: Deutsche Bank Upgrades 2 Top Gold Stocks to Buy

The resurgence at Cisco not only bodes well for these top companies, but industry peers as well. With an ever increasing need for latency, storage, security and data, we remain perhaps at the beginning of a huge build-out to accommodate current and future needs.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.