Cisco Powers Up as Dow Races to Hundred-Point Gain

Hillshire Farms takes a tumble after the announcement of the company's intended acquisition of Pinnacle Foods

May 12, 2014 at 2:30PM
Daily Fool

Stocks have raced higher to start the new week, with the Dow Jones Industrial Average (DJINDICES:^DJI) jumping out of the starting gate at the bell and rising 110 points as of 2:30 p.m. EDT. Most blue-chip stocks on the index are in the green. Tech giant Cisco (NASDAQ:CSCO) has gained today as Wall Street waits on the company's earnings coming up later this week. Around the market, Hillshire Brands (NYSE:HSH) made big news with a fresh acquisition. Let's catch up on what you need to know.

Will China, Cisco turn things around?
Long before the Dow opened this morning, China got the market day rolling with a boost. The country's leadership is pushing forward with new market reforms aimed at boosting a Chinese economy that has fallen off from once-astronomical growth as of late. Among other things, Beijing hopes to bring back foreign investment that has fled from emerging markets recently, which has taken a toll on the world's second-largest economy. Though Chinese stocks jumped and gave confidence to international analysts and observers, there's still a lot of work to do to keep growth stable at the 7.5% annual rate that Beijing wants. If China can't keep its economy on pace, stocks will have a hard time pulling out of the doldrums that have plagued this market and its investors over the past year.

Cisco Logo

Cisco's stock has assisted the Dow's run today, gaining 0.7% so far. The networking company will report quarterly earnings on Wednesday, and all eyes are on whether the Cisco can turn things around. The company has struggled to boost its earnings and sales, and analysts expect a decline of 6.8% in revenue year over year for this quarter. What's been the biggest problem? Cisco's revenue from switching products fell 12% in its last quarter, and emerging markets have taken a big hit -- revenue from this segment fell off by 3% in its most recent quarter, with China in particular giving Cisco problems. The company only makes about 20% of its total sales from emerging markets, but if Cisco can't turn around this niche, its path to turning around revenue declines will look even harder in the quarters ahead.

Around the market, Hillshire Brands said it will buy Pinnacle Foods (NYSE:PF) for $4.3 billion. The news has sent Pinnacle's stock up nearly 14% on the day, but investors haven't been as pleased with Hillshire's stock which has fallen more than 5% so far. Hillshire will boost its annual revenue to roughly $6.6 billion with Pinnacle in the fold, and the buyer hoping it can make the most out of the acquisition's big brands, such as its Vlasic pickles and Duncan Hines baking products. The move should also help turn Hillshire into a formidable competitor in the frozen foods niche: According to the Chicago Tribune, the combined company will become the third-largest frozen-food seller in the U.S. For investors interested primarily in Hillshire's 1.9% dividend, however, that yield looks ripe for the picking over the long term.

Elsewhere, Big Biotech's Biogen Idec (NASDAQ:BIIB) has jumped 4.3% today despite a lack of big news from the health-care giant. Biogen's stock has lost more than 11% over the past three months, and with the company rallying behind new oral MS drug Tecfidera, today's jump looks like savvy investors buying in on a great company's dip. It's a smart move: Tecfidera racked up more than $500 million in sales during the first quarter, sustaining momentum from a big launch in 2013. The drug's on pace to emerge as a blockbuster this year, and if Tecfidera can keep up its success at home while expanding abroad, look for this therapy to emerge as Biogen's foundation for years to come.

Can Cisco help you profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers