This rising tech stock is a direct bet on Trump’s tax policies

on May16

Cisco Systems headquarters in San Jose, California.

Justin Sullivan | Getty Images

Cisco Systems headquarters in San Jose, California.

Cisco Systems is having a breakout year with its stock rising more than 13 percent, and it might have more room to run if President Donald Trump’s tax plan is implemented.

Drexel Hamilton analyst Brian White said in a note Tuesday that Cisco is in a “prime position as a beneficiary of potential revisions in repatriation policies.”

Last month, the White House released a plan with a one-time tax on the trillions of dollars held overseas by corporations, providing a potential windfall for companies with large sums of money stashed outside the U.S.

Strategas Research Partners noted earlier this year that Cisco shares could be one of the biggest beneficiaries of this change in repatriation policy because the technology bellwether has one of the highest amounts of offshore cash relative to its market cap.

In December, Strategas said that companies that repatriated the largest percentage of their overseas profits as a percentage of their market cap quadrupled the S&P 500’s performance in the year after the 2004 repatriation tax holiday.

Cisco in 2017

Source: FactSet

Cisco CEO Chuck Robbins told CNBC in December that bringing back the tech giant’s massive overseas cash pile would let it do a combination of buybacks, dividends and M&A activity.

Cisco, which reports earnings Wednesday, should also remain in Wall Street’s good graces because it’s heading into its seasonally strongest quarter of the year and has a high dividend yield of 3.4 percent, Drexel’s White added in the note.

—CNBC’s Tae Kim contributed to this report.

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