Hilary Kramer's Daily Picks & Pans

Thursday, December 27, 2007 Guest blogger: Larry Schutts, vice president of Stockwinners.com and a contributing editor for Theflyonthewall.com. Larry looks for stocks with technical and fundamental characteristics indicating gains in the next 30 days. However, price movements may be volatile. He includes a stop-loss price in each post. Consider selling a position should the stop-loss be violated. Look for more of Larry's stock picks in the days and weeks to come.

Oracle Corporation (NASDAQ:ORCL) is the world's largest enterprise software company, providing database, infrastructure, and computer application software for managing business data and supporting business operations. Essentially, the programs facilitate functions in data storage/access, analytics, customer relationship management, supply chain management and software development. The firm provides a wide variety of consulting, training and license updating services. Products are sold through internet service providers, network integrators, resellers and independent software vendors.

Oracle pleased investors last week, when it reported Q2 EPS of 31 cents and revenues of $5.36 billion. Analysts had been expecting 27 cents and $5.04 billion. Database and middleware new license revenues were up 28% and applications new license revenues grew 63%. Management also guided Q3 EPS to 29-30 cents (29 cents consensus) and Q3 revenues to about $5.338 billion ($5.19B consensus). ORCL shares popped on the news and then moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the shares with eight "strong buys," 18 "buys" and seven "holds." Analysts see a 15% average annual growth rate through the next five years. The ORCL Price to Free Cash Flow ratio (17.93), Sales Growth rate (27.23%), EPS Growth rate (55.00%), Operating Margin (33.23%), Net Profit Margin (23.80%) and Return on Assets (14.80%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 56% of the outstanding shares. The stock is one of those used to calculate the S&P 100 Index, the S&P 500 Index and the Nasdaq 100 Index. Over the past 12 months, it has traded between $15.97 and $23. A stop-loss of $20 looks good here.

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This entry has 1 comments: (Add your own)

• #1 Comment from mnnetone 
  12/27/07 4:45 PM | Permalink

  I appreciate your email.About a month or so ago your email comes out in very fine print. Even with my magnifying glass I am not able to read the contents.Therefore will ypo please enlarge the letters so I can make full use of your
  advice.
  Thanks.
  Minoo Netervala