When I started in the investment biz twenty years ago, the Tech Bubble was building engine pressure. When then Fed Chairman Alan Greenspan referred to the mania as “irrational exuberance”, he was understating. Valuations and expectations were insane. Period.

#-ad_banner-#The Nasdaq Composite (COMP) was pretty much the benchmark for the technology madness. After a spectacular run up people from all walks of life were inspired to quit their day jobs to chase instant wealth day trading online. Of course it ended badly. From its peak, the Nasdaq gave up nearly 75% of the crazy money it made over the five year party.

Thirteen years later, the Nasdaq has reclaimed the dizzying highs from the heady days at the beginning of the 21st century. Are we headed for another crash? I don’t know, and I’m not going to utter the most dangerous phrase in investing: this time it’s different.

But, I am going to talk about valuations of a two of the biggest names in tech then and now. Basically, it’s damned near impossible to move data anywhere without these two companies facilitating the process. The big two? Cisco Systems (Nasdaq: CSCO) and Intel Corp. (Nasdaq: INTC).

The numbers really tell the story about then and now.

 As you know, the price to earnings ratio (P/E) of a stock is one of the best metrics to measure valuation. A high P/E shows that investors are extremely confident in the company’s ability to grow earnings per share (EPS) and they’re willing to pay a premium for that earnings growth.

As the internet exploded at sonic boom speed in the late nineties, the rush and demand to build the backbone of the telecom network that this new, sexy beast required to move bazillions of bytes of data and informtation translated into stratospheric earnings and revenue growth for Cisco, bidding the stock and its metrics up to nosebleed levels.

Naturally, everyone needed a computer to get on the internet and as desktop and laptop devices penetrated the market, Intel became the maker of the best and fastest processers for the machines. And, just like Cisco, Intel shares received the superbullish blessing of the investing masses. I remember people commenting at what a “bargain” INTC was at just 50 times earnings!

Then the bubble burst.

Both of these stocks were more than cut in half and both have basically traded in a sideways pattern for the better part of 15 years. However, despite that, these stocks are still two of the very best technology names to hold, and still play as important a role in the tech industry as they did 20 years ago. 

Cisco is still the leader in internet protocol networking equipment. And as the idea of the “internet of things” expands, the company will maintain its dominance. EPS have grown at an annual average rate of 10% over the last five years. Cisco’s dividend has grown by a massive 113% annually over the same time period. All the while, the company has amassed a cash pile of over $60 billion. Analysts expect Cisco to earn $2.27 a share this year, besting last year’s result by nearly 30%. As our phones, tablets, cars even refrigerators become smarter, Cisco will still be there, profitably, making sure they all can talk to each other.

While the notion of “Intel inside” seems to have lost its luster with the rapid decline of personal computer sales and usage, the world’s largest manufacturer of microprocessors is making inroads into the mobile technology space with products designed for handsets and tablets. While clearly the company is still behind in mobile product market share, its ironclad brand and even stronger product development should enable them to be competitive in that space. 

Intel has also invested heavily in its data center group that develops products and solutions for the cloud computing and enterprise computing markets. The commitment to this business segment was cemented at the end of 2015 with the acquisition of Altera for $16.7 billion in cash. Despite the purchase, the company is still sitting on a $25 billion dollar heap of cash.

Although revenue and EPS have been a bit stagnant over the last five years, bouncing in the $53billion and $2.30 band, Intel’s numbers are consistently predictable (remember “bondlike” stocks?) and the company is articulating a clear, strategic vision by choosing to play a long game rather than sacrifice for short term results that may be short lived. Intel is as relevant now as they were in 1998.

Risks To Consider: The biggest risk to Cisco’s business model is the seemingly endless state of anemic capital spending by businesses. While U.S. economic growth is considerably stronger than most of the world, companies have taken a “wait and see” attitude when it comes to capex. However, the company’s strong cash position and solid market share should get it through leaner times.

Intel’s challenges lie with the company being late to the mobile party. But management has shown a huge commitment, both philosophically and financially, to playing catch up as well as to securing a foothold in the cloud market. Consistent operating results and a steady dividend also provide some protection.

Action To Take: Former darlings of the “new economy”, Cisco and Intel still should serve as the cornerstone for any investor’s technology equity allocation. Cisco shares currently trade around $27.50 while Intel is priced at $29.63. Based on the high quality  of both businesses and the inherent value of the stocks, both should have an 18 month price target of $38 per share with a P/E expansion from current levels to 16, which is still below the P/E of the S&P 500. Excluding dividends, the result would be a 26% return for Intel and 34% for Cisco.

Editor’s Note: It’s the biggest energy story right now. And it’s about to make savvy investors 10X wealthier. When Tesla’s billionaire CEO, Elon Musk, revealed the wildly popular Model 3 car, no one guessed the revolutionary new technology hiding under its hood will blow the $1.3 trillion energy storage market wide open, sending three little-known tech stocks through the stratosphere. Don’t miss out. 

Disclosure: Adam Fischbaum owns INTC and CSCO in client and family accounts