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 Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!