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.
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.
