AAII Investor Update: A Cheap Valuation Isn’t Always a Bargain


Cisco Systems’ (CSCO) low valuation, balance sheet strength, revenue and earnings growth, and positive free cash flow caused it to appear on my personal stock screen. Based on these measures, the stock looks attractive, but there are risks.

This week I’m going to walk you through my analysis, explaining both what is positive about the stock and what worries me. The purpose is to show you why a low valuation does not automatically make a stock a bargain. Rather, thorough analysis is needed to identify any potential risks that would create concerns about the stock.

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