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The shares of Oracle Corp. (ORCL), which I first wrote about on April 7, 2009 at a price of $18.54, have pulled-back recently, in-sync with the Dow's recent decline, but just view the dip as an opportunity to scoop-up shares at a decent price. Here's why: Look for Oracle's 2010 revenue to rise 12-16%, and better than 10% in 2011, bolstered by an expanded product line, including 7-9% organic software license growth. Further, there's little to suggest that Oracle won't remain a leading provider of enterprise software, organized in two businesses: software and services.
Oracle also posted May quarter earnings per share of 60 cents, 6 cents above the First Call estimate -- a performance that suggests the company's integration of Sun Microsystems is going reasonably well. Revenue rose to $9.63 billion. Operating margins increased to 46% from 41%.
The First Call FY2011/FY2012 EPS estimates for ORCL are $1.89 to $2.10. Each EPS estimate looks about 5% low according to my analysis.
Technically, as noted, Oracle's stock descended to about $22 this spring, including an extended period below the key, 50-day moving average. Normally, the latter would be a concern, but ORCL's business model and track record gets the benefit of the doubt here.
2010 Outlook: I view Oracle as a long-term play, but if investors are looking to sell ORCL within the year, it's probably best to take your profits after it rises to $28-29, if it fails to clear $30.
Stock Analysis: I consider Oracle Corp to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in ORCL now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my ORCL position before August 2010 and I'd put a sell/stop loss at: $13.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The First Call FY2011/FY2012 EPS estimates for ORCL are $1.89 to $2.10. Each EPS estimate looks about 5% low according to my analysis.
Technically, as noted, Oracle's stock descended to about $22 this spring, including an extended period below the key, 50-day moving average. Normally, the latter would be a concern, but ORCL's business model and track record gets the benefit of the doubt here.
2010 Outlook: I view Oracle as a long-term play, but if investors are looking to sell ORCL within the year, it's probably best to take your profits after it rises to $28-29, if it fails to clear $30.
Stock Analysis: I consider Oracle Corp to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in ORCL now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my ORCL position before August 2010 and I'd put a sell/stop loss at: $13.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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