Today marks my 117th and final article at Money Morning.
Viewed as a portfolio, I'm proud that those 117 calls are up on average. Before we get into my take on Oracle Corp (NASDAQ: ORCL) I'd like to take a look back over years.
The 2010 picks have held up nicely with 12 positive and just six negative, for a 10 percent positive return on average, as of this writing.
It's been a great run and my thanks again to the entire Money Morning staff for the opportunity.
Now, let's talk about the one company that Buy, Sell or Hold has not covered yet but I believe is deserving of the column's final recommendation: Oracle Corp (NASDAQ: ORCL).
Time to Buy Oracle Corp. (NASDAQ: ORCL.)
Oracle is the last of the giant cash cows in the tech sector.
Oracle not only has a giant moat around its operations, it's also at one of the safest points in the growth curve.
The company has a nice net cash buffer compared to its issued debt and has grown its net operating cash flows each year since 2007. The company reported $9.7 billion in free cash flow in 2011.
That why I think now is the time to buy Oracle Corp. (**)
You see, Oracle Corp.:
- Has started paying a dividend.
- Has net cash and net cash flow.
- And has a high install base.
When we are talking about one of the most successful companies in history, you don't have to build a long list of data points to make the decision.
It's like drafting a young Michael Jordan, but knowing how his career would stack up beforehand.
Oracle is one of the last tech giants in another way: it's still growing.
Specifically, Oracle reported 2011 net income growth of 39%, sales or revenue over $35 billion with growth in sales or revenue up 32%, while EBITDA has grown to over $15 billion.
This has happened in an environment that has seen the company increase its metrics pretty much across the board during the great recession. It has a huge pile of net cash and net cash flow.
However, a large change has happened with Oracle.
The company has embraced the process of rewarding its long-term shareholders with a cash yield on its common shares.
The company also enjoys a massive install base and a sticky one at that. It's unlikely that anyone will soon develop a competing product that could hinder Oracle's future prospects.
With that in mind, here's how to position yourself in Oracle Corp.
Oracle is one of the largest, most liquid stocks on the planet. We are able to purchase our exposure without regard to liquidity issues that crop up in small stocks.
Let's look to purchase 50% now at market, and look for a 5% or so pullback to pick up the last 50%. The company now pays a dividend rate that is expected to climb over time. However, you can increase that cash yield on these shares by using a covered call strategy.
Oracle is one of the safest companies an investor can purchase shares in. It is in the same class as Microsoft, Intel, IBM, Google and Apple. It is worthy of a Buy at these prices in today's world of sovereign risk.
(**) Special Note of Disclosure: Jack Barnes has no interest in Oracle Corp. (NASDAQ: ORCL).
No matter how much I love writing, I love the investment world even more.
Today, I'm happy to announce JHB Capital LLC will be opening soon.
I want to thank Editor Bill Palaton and his exceptional editorial staff who worked with me. Publisher Mike Ward also deserves special praise for not just giving me the opportunity to write Buy, Sell or Hold, but nearly unlimited reign to make calls as I saw them.
I'd also like to thank all of my faithful readers. You've given me more than you'll ever know.
Related Articles and News:
- Money Morning News Archive:
Previous "Buy, Sell or Hold" Features.
Confessions of a Macro Contrarian.