by Dan Burrows | April 2, 2014 8:48 am
Oracle (ORCL[1]) is continuously resetting all-time highs, and the recent heavy-volume rally looks like it has legs.
ORCL stock finished up 1.4% in Tuesday’s trades to hit $41.49 per share, but this tech giant’s momentum stretches back a couple of weeks. Oracle shares are up 9.5% for the year-to-date, with most of that coming since March 21. (Indeed, ORCL stock gained nearly 12% since that time.)
Oracle has been the beneficiary of some good market-share news and fundamental analysis, which is helping to lift ORCL stock:
Happily for new money, ORCL stock looks to have significant value left in it despite the recent run-up in price.
By forward price-to-earnings, ORCL stock trades in line with its own five-year average, according to Thomson Reuters Stock Reports. What’s more attractive is that ORCL stock trades at a 9% discount to its own-five-year average on a trailing earnings basis.
ORCL stock also looks like a bargain when compared to the broader market. The S&P 500 currently sports a forward P/E of more than 16%, but a long-term growth rate of a bit less than 10%. That’s part of the argument that stocks are pricey.
By the same token, ORCL stock has a forward P/E of 13 (much lower than the S&P 500) and a long-term growth rate of 10.5% (a bit higher than the broader market). Based on relative valuation alone, ORCL stock looks like a bargain vs. the S&P 500.
Finally, Oracle is projected to have solid revenue growth in the upcoming quarters — no mean feat for any company these days, especially a tech giant. Sales are projected to rise about 5% in both of the next two quarters. The Street’s full-year forecast also points to top-line growth of 5%.
ORCL stock has a head of steam and it’s rapidly approaching an all-time high. With more catalysts to come, Oracle will take that out with little trouble.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
Source URL: https://investorplace.com/2014/04/orcl-stock-value/
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