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No. of Recommendations: 7

So, here's one thing that stuck with me - paraphrase: The market consistently thinks a gorilla is overvalued when in fact it is well undervalued. And then there is the paraphrase from PJ himself - "Buy the stock, the valuation will take care of itself".


Sufferin Suckatash! That's a tough one Sylvester. One I constantly wrestle with when looking over my portfolio and considering new entries.

Here is the best way IMO to look at the Juniper valuation. It seems you have concluded Juniper is the new gorilla. It would be believeable Juniper's market cap will eventually be comparable to Cisco's current market cap. Considering how bullish Robbie Stephens is on the nextgen network, and how much larger they consider this market to be than the one Cisco competed for and won, then it is reasonable (imo) to conclude Juniper's market cap will eventually go well beyond where Cisco is currently.

Current Cisco market cap ~ $400 billion
Current Juniper market cap ~ $75 billion

Using market cap instead of the typical valuation measurements better puts into perspective the potential share price appreciation from a Juniper. However, more common valuation techniques like P/S or Intrinsic Analysis might help cue you in to what the CAGR for a Juniper will be over a given time frame. When do they surpass $400b market cap? In 5 years? Next month?

Your concerns are justified and I share them. If Juniper crashes, there is long drop below them. So you might buy now and kick yourself in 6 months for not waiting for a better price. If you have the conviction, perhaps you just purchase now and make the commitment to purchase more should the price drop precipitously.

But then that better price may not come, and Juniper may continue to run away from those of us who have not bought in yet. (Note to Dan: look for spare change under mattress to purchase shares of Juniper Networks before the doggone thing hits 300)

No easy answers. I am convinced this is at least a 5 bagger over the next 7-8 years from the current price, no matter how "fully valued" anyone considers it now. They are executing and winning.

Good luck
DP
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