I suspected that my dueling partner Anders Bylund would say Cisco Systems
First, he's assuming that using relative valuation is the right way to invest. It may look like a historically cheap multiple for Cisco's shares, and Cisco may look inexpensive compared with its peers. But that's the same sort of thinking that led to the dot-com bubble in the first place. Cisco's bubble peak of around 200 times earnings looked cheap, in the terms of the era. It was, after all, being compared with companies that grew all sorts of obscure metrics but never profited.
Besides, 23 times earnings looks decent only when compared against Nortel's
The second assumption Anders had to make to justify Cisco's valuation is that it can still continue to grow in spite of clear cyclical troubles in its primary market -- a market, I might add, that Cisco already dominates. For a scary parallel on how poorly that may wind up, check back a little over a year ago to a duel on Select Comfort
No company can outgrow its market forever. Not even Cisco. Until its shares reflect that reality, my cash will stay away.