Oracle (NASDAQ:ORCL) has given up most of its gains for 2012 over the last few weeks as the overall market has sold off due mainly to growing concerns in Europe. Its valuation is compelling after pulling back 10% and it is also getting near technical support again.
Oracle Corporation - "Oracle Corporation, an enterprise software company, develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide." (Business Description from Yahoo Finance)
6 reasons Oracle is too cheap at $27 a share:
- Despite the recent drop in the stock price, consensus estimates for FY2012 and FY2013 have gone up nicely over the past two months.
- The stock is selling near the bottom of its five year valuation range based on P/B, P/S, P/CF and P/E.
- Revenue growth is expected to move up to 7% in FY2013 after booking 3% to 4% growth in FY2012. The stock is selling with a five year projected PEG of under 1 (.95)
- It is trading at 10 ¼ times forward earnings, a discount to its five year average (13.9)
- The 34 analysts that cover the stock have a median price target of $34 a share on ORCL. Credit Suisse has an "outperform" rating and a $40 price target on the stock.
- The stock has solid technical support at just below current levels (See Chart)
Disclosure: I am long ORCL.