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A Look at Oracle's Near Future

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The momentum looks likely to continue.

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Oracle (ORCL) has had some legs so far this year, but will the momentum continue? I think the answer is a resounding yes, and I wanted to weigh in with some of my thoughts ahead of the company's second-quarter earnings report, which are due out on December 17 after the bell.

1. The stock has been resilient and I like that. As an example, after turning in two better-than-expected quarters, the California-based company turned in an in-line quarter in its first quarter. Perhaps not surprisingly since the unspoken expectations always seem a bit high for the company, the shares stutter-stepped afterward in late September. But they've since come back and a new high may very well be in the cards.

2. I'm not one that likes to aggressively chase stocks like this, but if I'm right and it does hit a new high, I think it could draw even more retail -- and maybe institutional -- investors into the stock, and that we could be looking at the upper $20s soon.

3. What about the second quarter? The Street is at $0.36, and I'm going to go out on a limb and say it beats by at least a penny.

4. Oracle's pockets, at least as of August 31 according to its balance sheet, were filled with more than $20.5 billion in cash, equivalents, and marketable securities, which is a lot of coin. For some reason I'm not on Larry Ellison's speed dial, so I don't know the plans for all that flash. But it does give the company options should an opportunity, or even some difficulties arise.

5. Anyone spy the insider nibbling above the $22 level back in the summertime? I don't think they would have bellied up unless they figured they'd put some Benjamins in their pockets down the road.

6. The $28-$30 range looks like a reasonable level for the stock to be trading at, based upon the earnings it's expected to click out this year and the EPS it's expected to put up next year.

7.
One caveat: I remain a tad nervous about this overall market, and if the major indices backpedal, there's a chance the stock could take a whack by simple association.

Hey, have a great day!
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No positions in stocks mentioned.

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