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Cisco Systems, Inc. (CSCO) - free report >>
HubSpot, Inc. (HUBS) - free report >>
Cisco (CSCO) Eyes Splunk (SPLK): The Goldilocks Valuation Zone
Monday (2/14), the WSJ reported that Cisco (CSCO - Free Report) was looking to acquire Splunk for over $20 billion, with designs on reinvigorating its innovative growth outlay. SPLK was the Nasdaq 100’s leading Valentine’s Day component, with an over 9% daily rally.
Splunk currently resides in that perfect Goldilocks’ valuation zone to be picked up by the recently cash-rich big tech firms. SPLK has slid 45% from its peak 1.5 years ago into this Goldilocks valuation range: $19.7 Billion market cap, 6.5x forward P/S, and undeniably market-disrupting potential in AI-driven machine data management and real-time actionable analytics.
I wouldn’t be surprised if other SPLK suitors came out of the fray before CSCO can lock anything in, as this leading real-time data management business begins proving a successful cloud transition.
There appears to be a Goldilocks valuation zone where big tech is looking to pick up new economy innovators after the January capitulation.
Goldilocks valuation range: $5 to $30 billion market cap, (preferably) below a 10x forward P/S, and market-disrupting potential.
I expect to see elevated M&A activity among young market disruptors in the coming months, so look out for companies in this Goldilocks valuation zone.
Stocks I’m eying: HubSpot (HUBS - Free Report) , Upstart (UPST - Free Report) , and Alight (ALIT - Free Report) .
Even if these next-gen buys don’t get picked up, they’ll add sizable long-term growth potential to your portfolio for the future.
Take a look at my latest 4th Revolution video, which take a deeper dive into this subject: The Goldilocks Valuation Zone: Where Big Tech Discovers Innovative-Value