Oracle Corp. (ORCL) still cheap
In a bull market such as the one we are currently in, it is challenging to find bargains. The DOW keeps breaking records with no end in sight. The NASDAQ has been stellar and the S&P 500 is on a tear. Amid all these frenzy, there remain several technology companies that have yet to fully reap the benefits of this bull market. One of these technology companies is Oracle Corp. (ORCL), the second largest software company behind Microsoft (MSFT).
Although ORCL has risen from $13 to $18 in the last six months, I believed the stock is still currently undervalued. As I’m writing this, the stock has just been downgraded by First Albany from buy to hold so it just became a little cheaper. The reason sited for the downgrade was concern over recent movements of the stock and possible integration problems of its recent acquisitions. As you know, ORCL has been on a buying spree in the last couple years. While these are valid concerns, I believed it is over blown.
In the last five quarters, ORCL has reported numbers above Wall Street’s expectation. While the stock has moved, Wall St. remains pessimistic about the company’s future. As a result, this stock has yet to break the $20 level. In terms of revenue growth, the company is growing at a respectable 20 or so percent year over year. For a large software company, this is actually very good. Recent acquisitions of PeopleSoft and Siebel are helping ORCL expand into other areas beside the Enterprise Database market. Taking a long view approach, this is one company I believed one must own. However, before diving into the mix, I would recommend taking the time to further analyze the stock on your own. Based on my analysis, this stock is still inexpensive at $17-$18/share. Oracle to report earnings Monday, 12/19/06. Market is expecting .22 cent per share.
