Cisco Systems, Inc. (CSCO), Oracle Corporation (ORCL): 3 Technology Companies to Own Even When Market Corrects

With the Dow near multi-year highs of around 14500, the market is currently driven by extreme greed (with the fear & greed index at 77). Greed is good to boost the market, but too much excessive greed may signal a selling sign for smart investors. Investors need to be more careful as a “flight-to-quality” can begin anytime as market corrects.

Cisco Systems Inc. (NASDAQ:CSCO)

In this article, three quality technology stocks with strong fundamentals and high liquidity will be presented, including Cisco Systems, Inc. (NASDAQ:CSCO), Oracle Corporation (NASDAQ:ORCL), and QUALCOMM, Inc. (NASDAQ:QCOM).

Cisco Systems, Inc. (NASDAQ:CSCO)

The company has a market cap of around $115 billion, and is currently trading at P/E of 12.60 and forward P/E of 10.39. The stock trading near its 52 week high, and analysts have a target price of $23.44, suggesting 6.93% upside potential. Fundamentally, the company has had high operating and net margins, and generates stronger ROE as compared to peers in the communication equipment industry.

Cisco Systems, Inc. (NASDAQ:CSCO) has total cash of $46.38 billion, which is much more than its total debt of $16.29 billion. Cisco Systems, Inc. (NASDAQ:CSCO) generated strong operating cash flow of $11.87 billion with a levered free cash flow of $8.28 billion. The company is currently trading at a P/B ratio of 2.1, which is slightly under-valued compared to the industry average of 2.2. The stock currently offers an annual dividend yield of 2.55%.

Buy, Sell, or Hold

Cisco Systems, Inc. (NASDAQ:CSCO) has a strong competitive advantage in its core markets of routing and switching. Cisco Systems, Inc. (NASDAQ:CSCO) remains a buy with its solid balance sheet, strong cash flow, and high margins. At the current valuation, there is still more upside potential supported by Cisco’s 8.40% annual EPS growth for the next 5 years.

Oracle

The company has a market cap of around $170 billion, and is currently trading at a trailing P/E of 17.14 and forward P/E of 12.32. The stock is pretty close to its 52-week high, and analysts have a target price of $38.28, suggesting upside potential of nearly 5%. Fundamentally, Oracle Corporation (NASDAQ:ORCL) has had high operating and net margins. However, Oracle Corporation (NASDAQ:ORCL) generates lower ROE, and has higher debt/equity ratio as compared to the industry average.

Oracle Corporation (NASDAQ:ORCL) is highlighted with its strong revenue growth of 16.9% (3 year average) as compared to the industry average of 8.2%. Oracle has total cash of $33.70 billion, which is 70.5% more than its total debt of $19.76 billion. Oracle Corporation (NASDAQ:ORCL) generated strong cash flow of $13.53 billion with a levered free cash flow of $11.55 billion. The stock currently offers an annual dividend yield of 0.66%.

Buy, Sell, or Hold

To achieve consistent, steady growth, Oracle continues to innovate and acquire. Oracle Corporation (NASDAQ:ORCL) has also successfully anticipated the threat of could computing. Oracle remains one of the most solid buys in the technology sector with its solid balance sheet and strong cash flow.

With the upcoming Q3 2013 earnings report on March 20, 2013, where analysts are expecting an EPS of $0.66 with revenue of $9.38B, it is likely that Oracle will meet the high end of expectation and upcoming guidance should be on the positive end. Recovering data software spending may help the bottom line, while new software license and cloud subscriptions may improve the top line.

Qualcomm

The company has a market cap of $113 billion, and is currently trading at a P/E of 19.51 and a forward P/E of 13.29. The stock is near its 52-week high and analysts have a target price of $75.19, suggesting 15.73% upside potential. Fundamentally, Qualcomm has higher revenue growth, operating, and net margins, as well as stronger ROE than the industry average.

The company has a total cash of $13.28 billion, with a very small total debt of $31 million. Qualcomm generated solid cash flow of $6.19 billion, with a levered free cash flow of $4.37 billion. The company currently offers an annual dividend yield of 1.54%.

Buy, Sell, or Hold

With the recent share repurchase program of $5 billion and a 40% dividend increase, Qualcomm is returning more cash to its investors. With the launch of Snapdragon 800 and 600 in 2013, Qualcomm should continue to lead in the industry of wireless communication equipment, despite the catch up from Intel Corporation (NASDAQ:INTC). With the recent launch of Samsung’s Galaxy S4, Qualcomm’s quad-core Snapdragon application processor is expected to be used in the United States. All things considered, Qualcomm remains a solid long-term buy.

Note: Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

The article 3 Technology Companies to Own Even When Market Corrects originally appeared on Fool.com and is written by Nick Chiu.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!