Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Oracle Corporation a Good Stock to Buy?

Page 1 of 2

Oracle Corporation (NASDAQ:ORCL) made our list of the ten technology stocks hedge funds were crazy about during the third quarter (see the full rankings) with 60 hedge funds and other notable investors reporting a position in the stock. Oracle has been in the news for its plan to accelerate its quarterly dividend payments, allowing investors to record them as income for 2012 (as it appears quite possible that the tax rate on dividends will rise substantially next year). Given the hedge fund interest it’s worth considering for longer-term investors as well.

The company’s most recent 10-Q (for the quarter ending in August 2012) showed a 2% decrease in revenue for the quarter compared to the same period in the previous fiscal year. Growth in the software business was offset by declines in hardware and services. With Oracle Corporation generally reducing costs- though investments in R&D were up 14%- net income increased at an 11% rate. As such the company seems to be doing well. Share count also decreased by 4%, and Oracle spent over $3 billion repurchasing shares last quarter. We’d take that as an indication that the company could continue to use buybacks to return cash to shareholders.

David Shaw

At a market capitalization of about $150 billion, Oracle Corporation trades at 16 times trailing earnings. However, as we’ve noted, the company has been growing nicely despite its size. Wall Street analysts expect that this growth will continue, with consensus for this fiscal year placing the stock at a current-year P/E multiple of only 12. That is setting a fairly rapid pace for growth in earnings per share, even with continued buybacks. Still, Oracle probably does not need to grow quite that fast to justify its current valuation.

We’ve already mentioned Oracle’s popularity in the hedge fund community. The Baupost Group was one major holder of Oracle stock, reporting a position of 13.5 million shares. Baupost is managed by Seth Klarman, a renowned value investor whose 1991 book Margin of Safety sells for $1,500 (check out Seth Klarman’s stock picks). Billionaire David Shaw’s D.E. Shaw nearly tripled its stake to a total of 6.8 million shares (find D.E. Shaw’s favorite stocks).

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...
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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!