Oracle Corporation (ORCL): Is It a Good Investment?

Page 1 of 2

Oracle Corporation (NASDAQ:ORCL) is a giant in the enterprise software and database management industry. Oracle also has one of the leading positions in the quickly growing enterprise application marketplace. Research firm Gartner expects the enterprise resource planning industry to reach a size of $25 billion by the end of this year. Other drivers for Oracle will be increased spending on cloud computing and software-as-a-service markets, where global SaaS industry revenues are expected to be up 18% this year, and grow from $14 billion in 2012 to $22 billion in 2015.

Ken Fisher FISHER ASSET MANAGEMENT

Oracle has seen weakness in its hardware segment, but this has only marginally hurt the tech company given its diverse product portfolio. Future growth is expected to come from cloud computing systems, where Oracle has advantages over top rivals such as IBM and SAP. A focus on the cloud computing industry will only help fuel Oracle’s industry-leading position when it comes to high-margin products. Oracle’s EBITDA margin is upwards of 46%, where key competitors Cognizant and Adobe are at only 24% and 34%, respectively.

Oracle also remains proactive when it comes to acquisitions. Over the last ten years, the tech giant has shelled out more than $40 billion to acquire 80 companies, including Sun Microsystems. The Sun acquisition is expected to ultimately be the biggest long-term positive, as Oracle is now able to cross-sell its already robust software portfolio with its newly acquired hardware business.

From a valuation standpoint, Oracle is the cheapest when compared to major peers on a forward P/E basis at 11x. This is also below the tech company’s long-term historical P/E of 15x. Billionaire Ken Fisher – founder of Fisher Asset Management and long-time Forbes columnist – is Oracle’s top fund owner (check out Fisher’s newest picks).

Microsoft Corporation (NASDAQ:MSFT) is another tech company with a penchant for product diversification. This tech giant pays the highest dividend of Oracle’s peers at 3.4% with a payout ratio that is only 37%. Microsoft is a hedge fund favorite given its history of solid dividend increases, but it also has a portfolio that could present growth opportunities, including its Surface tablet, latest Windows OS and Office Suite. Microsoft is also one of the cheapest stocks in the industry at an 8x forward P/E. David Einhorn was one of the many billionaires owning Microsoft last quarter (see Einhorn’s new bets).

Page 1 of 2
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

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

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!