Fresh clarity around the Fed’s plan for monetary policy helped boost investor sentiment last week, despite unresolved Russia-Ukraine tension, setting the major indices up to close their best week since November 2020. The Dow rose 5.5%, the Nasdaq spiked 8.1%, and the S&P 500 surged 6.1%, making up nearly half of its correction losses.
“After one of the best weeks in the year, now the question is will stocks be able to hold those gains? One bit of good news is that April is historically one of the best months for stocks, so the calendar remains positive for the bulls,” said Ryan Detrick of LPL Financial.
With some of the pressure off of markets due to Fed clarity, many investors are reevaluating the recent pullback in technology. This morning we’re shining the spotlight on a tech giant with a balance sheet and 2022 prospects that support the theory that the stock has been oversold.
With a market cap of nearly $208 billion, Oracle Corp (ORCL) is the second-largest software company in the world. Oracle provides information technology (IT) products and solutions to governments and companies around the globe. The massive tech conglomerate also offers cloud-based industry solutions, cloud license business infrastructure technologies, hardware products, enterprise servers, storage solutions, consulting services, and other hardware-related software offerings.
In its fiscal year 2022 third quarter, ended Feb. 28, 2022, ORCL’s operating income rose year-over-year to $4.81 billion, and total revenues increased 4.2% year-over-year to $10.51 billion in the third quarter. The consensus sees a gradual acceleration for ORCL, with $11.71 billion in revenue forecasted for Q4, a 4.3% year-over-year increase.
Last week Oracle announced a data storage deal with TicTok that would further support revenue growth and could serve to inspire other significant relationships for the company as the global movement to secure sensitive data advances. Plus, Oracle’s expanding presence in the healthcare sector and strong momentum in its Software as a Service (SaaS) business remain a source of encouragement.
Societe Generale analyst Richard Nguyen upgraded Oracle to Buy from Hold after the company reported Q3 results. The company’s investment capacity and “excellent execution track record” lead Nguyen to believe the company is poised to gradually step up its revenue growth while maintaining its high profitability. He views the stock as “highly defensive in this uncertain environment.” In the downturns of 2003, 2009, and 2020, Oracle showed it could preserve and even grow its margins via “excellent execution,” the analyst told investors.
The stock has slumped 7% in price year-to-date and 21% since its December high. Oracle has a trailing-twelve-months P/E of 16.64 compared to an industry average TTM P/E of 30.13. Anyone considering a position in this sought-after name might think now a good time to strike. The 1.57% dividend is another added incentive.
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But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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