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Traders should “rethink” one tech stock associated with an old corner of the industry — making printers and scanners, according to one investor. That’s Xerox , Philip Blancato, CEO of Ladenburg Thalmann Asset Management, told CNBC’s ” Street Signs Asia. ” “This is one of my favorite names in years,” he said, adding that it has begun to diversify beyond printing and making machines. “They’re becoming an AI company. They’re becoming a cloud company. They’re no longer just [in] printing and machines. They’re expanding in all aspects of net based cloud services for all business enhancements,” Blancato said. He added that it’s now a tech company trading at valuations “significantly better” than any other tech company. “Rethink the name Xerox, it’s going to surprise you what they can do in the next couple of years,” he said. “Jump on them.” Xerox reported mixed third-quarter earnings last week. Its adjusted net income was $77 million — up $44 million year over year, and its free cash flow hit $112 billion, up $130 billion year over year. However, it reported revenue of $1.65 billion, which was down 5.7%. Its CEO Steve Bandrowczak pointed to growth in adjusted profit, earnings per share and free cash flow, and said “reinvention” will reposition the business to enable “sustainable profit improvement” through the expansion of its services. Blancato added, “They have a strong acquisition arm to speed up the innovation process in areas that are not their core competencies like digital services, and cyber security.” He noted that about 77% of Xerox’s revenue isn’t from products like printers and ink, but from the services and financing segments of its business. The cherry on top of the cake is Xerox’s dividend yield, which is at a “very strong” 8.2% and offers a source of return for investors, Blancato said. According to FactSet, Xerox’s indicated annual dividend is at 8.1%. This metric annualizes the latest dividend to project the anticipated dividend for the next 12 months. That’s higher than the Nasdaq Composite’s 0.9%, according to FactSet. The company has been paying out dividends steadily . Its most recent annual dividend per share was $1, and has stayed that way since 2018. In the years before, however, its annual dividend per share was as low as $0.17 in 2012. Shares of Xerox are down nearly 12% in the year to date, lagging behind the S & P 500’s nearly 10%. Analysts covering the stock gave it potential upside of 13.9%, although they were either underweight on it or gave it a hold rating.
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