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Tibco Software Inc. (TIBX): A Cheap High-Growth Software Company

Microsoft Corporation (NASDAQ:MSFT) trades for just 13.2 times forward earnings and is expected to grow its earnings by just over 6% annually going forward. Additionally, the company pays a very nice dividend yield of over 2.6%, and they have raised the payout every year in recent history. Also worth considering is that Microsoft has over $51 billion in net cash on its balance sheet (cash minus debt), which represents more than 17% of their market cap. So, not only does Microsoft have all of the characteristics of a great long-term investment, but they are actually pretty cheap right now.

Oracle: The Enterprise Software King

Oracle Corporation (NASDAQ:ORCL) is a leading provider of software for enterprises, and also produces some hardware. Oracle is in the process of shifting their business model to software-as-a-service (SaaS) computing, and the company has been acquiring several smaller cloud-computing software companies to help with this transition. Over the past year alone, Oracle has acquired cloud-based companies RightNow ($1.5 billion), Taleo ($1.9 billion), and Eloqua ($900 million).

Oracle may be a good compromise between growth and stability. At 13.8 times current fiscal year earnings (2013), Oracle is projected to grow its earnings by 9% next year and 9.6% in the following year, which is excellent growth for such a low P/E. Oracle, like Microsoft, also has a very significant stockpile of cash, which currently sits at about $17 billion more than the company’s debt.

What to Do?

With the decline in TIBCO’s share price over the past year, and earnings expected to resume growing, now may be a great time to get into a high-growth software company at a nice discount.

The article A Cheap High-Growth Software Company originally appeared on and is written by Matthew Frankel.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Tibco Software. The Motley Fool owns shares of Microsoft and Oracle. Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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

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