Time to get on board the Oracle Express

Posted Apr 7th 2009 8:00AM by Joseph Lazzaro
Filed under: Oracle Corp (ORCL), Stocks to Buy

It goes without saying that you'd call this a selective market: Select the wrong stock, and there's a 30-40% haircut up ahead; select the correct stock, and you're positioned for the recovery with modest downside exposure. And with this in mind, Oracle (NASDAQ: ORCL) is worth a review.

There's no mystery regarding Oracle's bread-and-butter. Oracle remains a leading provider of enterprise software, organized in two businesses: software and services.

Oracle's broad product portfolio, impressive geographic footprint, and maintenance revenue streams will allow it to continue to grow during the recession, but obviously not as robustly during a GDP expansion. Meanwhile, cost containment should help increase margins. Further, any pleasant surprises regarding the U.S. economy's recovery timetable will provide a nice tailwind for ORCL. Hence, the sum is a favorable risk/reward that should not be passed up, for investors who can tolerate moderate risk. The First Call F2009 / F2010 EPS estimates for ORCL are $1.42 / $1.49.

Stock Analysis: Oracle is a moderate-risk stock. Consider buying a 25% position in ORCL now; then buy another 25% in three months, if the U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your ORCL position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $13.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: featured, orcl, software, software services