In the following article I will discuss 10 widely held stocks on the market today. I chose these stocks because they are fierce competitors within their industries, sparking investor interest with recent acquisitions and developments. I'll take into account any upside or downside catalysts, and make buy, sell or hold recommendations based on fundamentals such as price/earnings, return on equity and current ratio, to name a few. I will also cross examine these 10 stocks, highlighting competitor's contrasts and affording a balanced view. Let's find out whether you should buy, sell or hold these stocks.
Oracle Corporation (ORCL), currently trading around $28, has a market capitalization of about $142 billion. Oracle is in the application software industry and has a trailing twelve month price/earnings ratio of 15.52, a price/earnings growth ratio of 0.99 and a price-to-book ratio of 3.39. Return on equity is robust at 24.26. Both quarterly year-over-year revenue and earnings growth are in positive territory at 2.40 and 17.20 respectively. Oracle is financially sound, as the debt/equity and current ratios of 34.96 and 3.48 respectively, demonstrate. Oracle pays a modest dividend, currently yielding 0.90%, with a payout ratio of 13%. A couple of upside catalysts for the stock come by way of a recent announcement that Oracle is making solid inroads into financial services companies with its Oracle FLEXCUBE and financial services analytical software. The second is the finalization of Oracle's acquisition of RightNow Technologies. I rate this equity a buy.
Rival SAP AG ADS (SAP) trades at around $60 per share and has a market cap half that of Oracle at about $72 billion. Their prices/earnings ratios are just tenths apart with SAP's slightly higher 15.93. Price/earnings growth ratios are tighter still with SAP reporting 1.12. SAP's price to book falls short at 4.29. SAP enjoys a higher return on equity of 30.54%. Quarterly year-over-year revenue and earnings growth outpace, reporting in at 10.80 and 176.30 respectively. SAP's debt/equity ratio is not significantly different at 33.48 but its current ratio of 1.54 is poorer by half. SAP offers a nice dividend, yielding 1.40% and sustained support is all but guaranteed with a payout ratio of 16%. Upside catalysts include SAP's recent recognition by the food and beverage industry as a top technology provider. Also helping drive the stock was SAP's December, 2011 acquisition of SuccessFactors. At the end of the day, both stocks shake-out as a buy in my book.
Micron Technology, Inc. (MU) is trading at around $8. This $7 billion-plus large cap in the semiconductor and memory chip industry has no trailing twelve month price/earnings ratio, a negative price/earnings growth ratio (-2.26) and a fractional price to book of 0.91. Return on equity also lurks in negative terrain at -1.72. Year-over-year quarterly revenue growth is -7.20 and there is no earnings growth to discuss. Micron's ability to service long term and current debt is unimpaired for the moment. The debt/equity ratio is 21.83 and the current ratio is 2.72. Micron pays no dividend. The share price has risen in recent weeks on rumors of merger talks with Japan's ELPIDA MEMORY (ELPDF.PK). I don't consider this to be that much of an upside catalyst as both companies are weak. The fundamentals here support nothing better than a hold.
Rival OCZ Technology Group Inc (OCZ) also trades at about $8 and has a market capitalization of about $418 million. There is no available price/earnings ratio. The price/earnings growth ratio is 3.14 and price to book is 3.21. Return on equity is predictably negative at -20.59. Quarterly year-over-year revenue growth is 93.70 but quarterly year-over-year earnings growth is below basement level and unreported. Surprisingly, OCZ has enviable debt/equity and current ratios of 16.67 and 1.88 respectively. OCZ pays no dividend. The fundamentals simply do not support the acquisition of this company's stock.
Vodafone Group Plc (VOD), trading at around $27, is a large cap with market capitalization approaching $139 billion. It's priced cheap at 12.54 times trailing twelve month earnings. The price-earnings-growth ratio is 1.28 and price to book is 1.05. Return on equity is modest at 7.97. Quarterly year-over-year revenue growth is 4.10 with quarterly year-over-year earnings growth coming in at -11.40. Long-term debt service is supported by a debt/equity ratio of 42.35 and the current ratio of 0.99 is adequate to support current liabilities. Vodafone pays a hefty dividend currently yielding 7.70% on a payout ratio of 54%. I understand the dividend check is net of the United Kingdom's taxes, so non-resident investors have to file for a refund of the tax. This is quite a hassle, but necessary to reap the full dividend reward. A recent tax victory in India has opened a potential for substantial revenue growth, a significant upside catalyst for Vodafone. Vodafone's fundamentals are sufficiently strong to make this stock a buy.
DEUTCHE TELE AG ADS (DTEGY.PK) has a market cap of about around $52 billion and trades at about $12 per share. The stock is a bit pricey, trading at 27.51 times trailing twelve month earnings. The price/earnings-growth ratio is not available. Price to book is 1.04. Return on equity is not very attractive either, reported at 3.25%. Price to book is tree-top high at 11.01. Quarterly year-over-year revenue and earnings growth are -4.10 and 14.60 respectively. Deutche's debt/equity and current ratios are 122.33 and 1.45 respectively. The company pays a handsome dividend yielding 8.40% but reports no payout ratio. A recent news report disclosing Deutsche Telekom's involvement in bribery charges brought by the SEC and U.S. Department of Justice is a downside catalyst for me. That aside, the fundamentals are poor and this is not an equity I would consider having in my portfolio.
Fifth Third Bancorp (FITB) trades at around $13 and this large cap regional Mid-west bank has a market cap of almost $12 billion. Fifth Third makes an excellent first impression with its trailing twelve month price/earnings ratio of 11.02, price/earnings growth ratio of 1.95 and fractional price to book of 0.93. The bank's return on equity is 9.50%. Quarterly year-over-year revenue growth rose by 12.90% but quarterly year-over-year earnings declined, reporting at -5.70%. Debt/equity and current ratios are not stated because of the unorthodox reporting mandate U.S. regulators impose on national banks. Fifth Third pays a dividend yielding 2.10% against a pay out ratio of 24%.
Also competing for your investment dollar is PNC Financial Services Group Inc (PNC) trading at about $60 with a market capitalization of about $32 billion. The stock looks a bargain at 10.61 times trailing twelve month earnings, a price/earnings-growth ratio of 1.22 and a fractional price to book of 0.97and 8.76% isn't a bad return on equity for the banking business. Year-over-year quarterly revenue growth is a modest 4.90% and quarterly year-over-year earnings growth disappoints at -42.20. PNC pays a decent dividend, yielding 2.30% on a quite sustainable 20% payout ratio. I am comfortable rating both stocks a buy.
Energy Conversion Devices, Inc. (ENER) is trading at around $1 and has a market capitalization of about $54 million. As a result of losses, $306 million in 2011 and $457 million in 2010, there is no price/earnings ratio to report. The price/earnings growth ratio is -0.02. Price to book; it's not available. Return on equity is, of course, in negative territory and reported at -261.24. Year-over-year quarterly revenue growth is reported at -66.40. Quarterly year-over-year earnings growth, that's right…not reported. Debt/equity ratio is unreported also but the current ratio is 4.03. So what has driven this stock from a January 3, 2012 closing price of $0.20 to over $1.00. Certainly not its fundamentals! The upside catalyst here is the launch of a new product that partners well with Amazon's (AMZN) very popular Kindle. Sadly, no hard data are available on how many Kindles have been sold since their début so it is almost impossible to project what the actual impact on revenue and earnings growth might be for Energy Conversion, but no one would disagree that Kindle sales have been in the millions. Then there's the question of Kindle owners shelling out another $80 for the solar cover. The concept is brilliant, but whether or not this will reverse Energy Conversion Devices' fortunes will take time to determine. I am a hold on this one and a seller if it begins to slip.
Competitor SHARP CORP LTD ADR (SHCAY.PK) trades around $9 with a market cap of over $9 billion. As with Energy devices we have no price/earnings ratio available. Price/earnings growth is reported at 0.58 and price to book is fractional at 0.75. As a master of the obvious, I can report a negative return on equity of -3.21%. Revenue growth (quarterly year-over-year) is also negative (-11.60). Quarterly year-over-year earnings growth clocked a whopping 159.50% proving once again that no single fundamental is an indicator of corporate health or value. Sharp's debt/equity position is better than the U.S. government's but still abysmal at 94.01. The current ratio passes muster, reported at 1.20. The downside catalyst here is that Sharp invested a lot of blood and treasure to develop its 3D enabled high-definition television but they haven't taken-off with consumers. Brush on a little European economic slowdown, add a few strokes of currency fluctuation and you do not have a pretty picture. I'll be passing on this one.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.