Top Stock Picks of Some of BE’s Young Investors

See what the professional experts have to say about their picks

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Erika Smith

Erika Smith, 25, Atlanta
Tip for Beginners: Understand what type of investor you are. Use investment questionnaires to develop a mix that is suitable for your financial goals based on your time horizon and risk tolerance.

My favorite holding: Oracle Corp. (ORCL)

Why I like the stock: My interest began in 2005 when Oracle acquired Siebel Systems Inc. This signaled the company was making a serious effort to increase market share and challenge the dominance of German enterprise software maker SAP (SAP). Oracle’s products will be increasingly relevant as the world continues to look for information technology solutions to reduce costs and innovate how we do business. For example, reduction of administrative costs will be important to U.S. healthcare reform. Oracle should be able to provide solutions that will streamline healthcare processes and reduce costs to gathering and use patient data.

The Professional Opinion

Analysts Consensus
Strong buy: 10
Buy: 10
Hold: 7

John DiFucci of JP Morgan Chase:
“We believe that Oracle Corp. is better equipped than most software companies to weather a soft economic environment given its ability to rationalize its cost structure that has been temporarily burdened by a myriad of acquisitions. Our analysis indicates that Oracle shares are attractively valued at current levels. Oracle is running its business assuming a prolonged economic downturn persists for the foreseeable future, resulting in an environment of declining corporate IT budgets. Oracle will look to gain share in this environment through up-selling and cross-selling into its 320,000 strong customer base of primarily large corporations (versus small businesses). Management expects to grow margins by growing revenue by greater than the rate of expense growth. While Oracle’s strategic relationship with its customers may position it better than most software companies, its top line is not immune to a macro slowdown.”

Ted Parrish of the Henssler Financial Group:
“Oracle has a solid base of customers and a lot of their revenue is “recurring revenue,” which means it’s stable and predictable since they lock their customers into multi-year contracts. The reason to buy right now is because the stock is very cheap on any relative measure, price to earnings, price to sales, price to cashflow. It’s trading for a multiple that’s lower than the market (technology sector) and for a company of its quality, that’s hard to believe. But its expected growth in earnings is above average and right in line with its price/earnings ratio.”

* When investing or making any type of financial decision, it is important to do your own research before making any decisions.
** Analysts consensus taken from Yahoo Finance

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