Stock Analysis: Cisco Systems or IBM

Tech bellwethers Cisco Systems, Inc. and International Business Machines Corporation have much in common. Both are superficially very cheap stocks, but as usual in such cases, significant questions exist over their strategic futures. What is the market afraid of, and are they worth buying on a risk/reward basis? Let's take a look.

Going cheap

Both stocks look cheap, with dividend yields of around 3.6% and free cash flow generation that suggests they could pay much more. In addition, if you look at enterprise value (market cap plus net debt) to free cash flow, the stocks are worth buying even if they only grow earnings in line with inflation.

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