Three stocks for a defensive tech portfolio

• Juniper Networks is fundamental to the internet, networking, and communications, yielding 2.8%.

• Cisco Systems is equally essential to the system and is yielding 3.1%.

• Broadcom has the highest value but is still cheap at 15.5X earnings and paying 2.9% in yield.

• 5 stocks we like better than Broadcom.

Defensive stocks like Juniper Networks (NYSE: JNPR), Cisco Systems (NASDAQ: CSCO) and Broadcom (NASDAQ: AVGO) should be on your radar, given the mounting economic uncertainty. As strained as the outlook is, these companies continue to report and forecast growth due to their industry and positions.

While tech may not be the go-to sector, given its tilt toward growth, these are blue-chip businesses with healthy cash flows and market-beating dividends.

One of the more exciting aspects of these companies is their exposure to AI. AI is the next super-cycle in tech, and these companies will be supported by the trend. The AI industry is estimated at $1.5 trillion and is expected to grow at a near-40% CAGR for the next 8 years, so these stocks offer a real opportunity for investors.

Juniper Networks offers value and yield

Juniper Networks is an IP-focused network devices and services company with its fingers in the cloud and AI. The stock trades at 13.75X earnings which is low for a tech stock producing double-digit growth, and it pays a high-yielding 2.8% dividend.

The Q4 results were mixed, with revenue slightly short of the Marketbeat.com consensus, but the margin was better-than-expected and helped to drive solid results on the bottom line. The guidance for Q1 is favorable and is expecting sequential and YOY growth. That news has the analysts adjusting their positions and firming the sentiment.

There are 16 analysts with current ratings, and they have this stock pegged at a Hold. This is down from last year’s Moderate Buy but firm in the wake of the Q4 results. This shows a bottom in the sentiment echoed by the price action, and the analysts' average target suggests more upside.

The consensus is about 10% above the current price action and rising in the near term. The most recent targets have it trading slightly above the consensus, which puts it on the cusp of a new 10-year high.

Cisco Systems, fundamental to the Internet

Cisco Systems is another network devices and services company that offers value and yield. This stock trades at a slight discount to JNPR and pays a slightly better yield because of it. The CQ4 results were also slightly better, with outperformance on the top and bottom lines and guidance that wowed the analyst.

The company’s FQ3 revenue guidance calls for roughly double what the analysts had expected and sparked a round of bullish commentary. The company received at least 15 shout-outs, with the sentiment firming to a Moderate Buy and the price target trending higher soon. The consensus target assumes at least a 12.5% upside for this stock and is on the cusp of a 25-year high.

Broadcom a top choice among analysts

Broadcom is a semiconductor manufacturer with diverse clients in the networking and communications industries. Cisco Systems is listed as a top-10 customer for this lightly-valued tech giant. The stock trades at only 15.5X its earnings and pays nearly 3.0% in yield. The recent results support dividend health and distribution growth, a quality of all these stocks.

The FQ1 results were better than expected, came with market-beating guidance and the announcement Broadcom was in generative AI. Generative AI is creating new text or images using input data. The analysts are raising their ratings and price targets because of it and have this stock on track for a new all-time high in 2023.

Bank of America analyst Vivek Arya reiterated the firm's buy rating and raised its per-share price target to $725 on Broadcom, pointing out the company’s recently announced exposure to generative AI. “Trading at just 13-14x PE, [Broadcom] provides perhaps the most compellingly valued exposure to the fast-growing generative AI market,” said Mr. Arya.