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Posts Tagged ‘oracle’

Apple Inc. (NASDAQ:AAPL): 4 Top Tech Stocks For 2013

January 10th, 2013

January is here and predictions for the coming year are rampant. There are so many great cutting-edge technology companies and hopes for the next 12 months that it’s easy to lose your discipline and let greed take over. I’d love to spend the next Read more…

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Tech Firms That Will Get a Boost From Obamacare (NYSE:IBM, NYSE:ACN, Nasdaq:ORCL)

January 4th, 2013

January 1, 2013 marked the beginning of the era of universal mandates, penalty taxes, tax credits and health insurance exchanges. Of all the features of Obamacare, the whole concept of health insurance exchanges should pique your Read more…

Healthcare

Is Warren Buffett Wrong About this Well-Known Stock?

June 6th, 2011

Is Warren Buffett Wrong About this Well-Known Stock?

Back in February, I took a close look at Warren Buffett's $12 billion stake in Wells Fargo (NYSE: WFC).

Well, it's now more like a $10 billion position. He hasn't sold shares, but the bank's stock has been steadily dropping, giving the Oracle of Omaha a rare black eye. To understand Buffett's next move with this massive banking concern, you need to understand why shares are marching backward.

The long-term view
Buffett didn't simply start acquiring shares in recent quarters. He's been doing so for a number of years. But you could argue that his long-term bullishness has been a bit misplaced, or at least a bit premature. He steadily bought Wells Fargo shares in the middle of the last decade, despite signs the housing sector was starting to overheat. More recently, he bought a lot of stock last fall and winter on hopes the U.S. economy was on the cusp of a broad-based upturn. As a result, his buying binges in 2007 and again in late 2010 took place in the low $30s, above the current price.

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Warren Buffett’s Favorite Foreign Stocks

March 9th, 2011

Warren Buffett's Favorite Foreign Stocks

He may be an American-investing icon, but Warren Buffett still owns a few foreign stocks. Why? The funny thing about a disciplined value-investing approach is that it works all over the world — not just in the United States. The bullish kicker for Buffett is how these stocks not only offer all the upside of long-term value names, but also offer a geographical diversity that simply can't be achieved with an all-U.S. portfolio.

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36% Gains From a Takeover — and Two More Stocks That Could Follow

November 13th, 2010

36% Gains From a Takeover -- and Two More Stocks That Could Follow

Back on October 26th I suggested e-commerce software provider Art Technology Group (Nasdaq: ARTG) was an attractive buy at the then-current price of $4.39. [Click here to read the article] A few days later, the company was acquired by Oracle (Nasdaq: ORCL) at a price just under $6.00 — a nice +36% move in the span of about a week.

So how'd I do it? Well, it was actually quite simple. I was 100% confident the company was going to continue growing its bottom line, as it had been for a few quarters. I was about 70% sure those results would translate into a rising stock, as had been the case — mostly — since early last year. And, I had absolutely no idea the company was going to be snagged by Oracle.

I don't say that to create any self-deprecating humility that I'll turn around later; I really had no idea that Art Technology Group was a target. I just knew it was a great company I’d want to own, and as it turns out, Oracle agreed.

I have two more acquisition candidates like Art Technology in mind, but before I share them, it may be worth explaining my thought process.

The whole experience got me thinking about some of the other M&A chatter we’ve been dancing with during the course of this year, much of which never panned out.

Take Microsoft's (Nasdaq: MSFT) rumored buyout of Adobe (Nasdaq: ADBE) for instance. A mere meeting between Microsoft's head Steve Ballmer and Adobe's CEO Shantunu Narayen sent Adobe shares soaring as much as +16% when the buyout buzz was circulated on October 7th. The stock tumbled by about half that amount the next day when the rumors were snuffed.

Fortunately, Adobe shares have since reclaimed almost all of that lost ground, but surely more than a few investors bought at the high and then defensively sold at the low of that span.

California Pizza Kitchen (Nasdaq: CPKI) is another example of a fizzled acquisition-based rally. The company effectively put itself up for sale on April 9th, and pushed shares from $18.18 to $20.74 as traders jockeyed for a piece of the company before it was bought. By July, the stock had reached a low under $13.00, having never moved above that peak of $20.74, and still no suitor in sight.

The same story unfolded again when renewed whispers of a sale shot the stock to a peak price of $20.00 on July 28th. Since then, not only have we still not seen a buyout, but investors who bought it at $20.00 on acquisition hopes have yet to see the stock hit $20.00 again.

If you're keeping score, that's two buyouts that were well-publicized, then highly-speculated on, that ultimately fizzled — and cost investors money in the process.

Now contrast that with the acquisition of Art Technology Group, which nobody saw coming, yet managed to materialize and pay off on a big way.

Get the point? If your only goal is to step into a target company before a possible acquisition, you're likely to be disappointed more often than not — not to mention stuck with a stock you may not want. If you focus on owning great companies, though — as we all should — at the very least you'll own a great company and you may just win big from an acquisition anyway.

With that as a backdrop, I can unveil my next two potential acquisition targets. The first is A-Power Energy Generation Systems (Nasdaq: APWR), and the other is Xyratex (Nasdaq: XRTX).

No, neither of these company names has been spinning in the M&A rumor mill. That's the point. They are both great companies, however, that would be as attractive to another company as they are to individual investors.

Xyratex is a data-storage player, which is an arena that's seen more than its fair share of buyout interest lately. Most of the focus seems to be on Compellent Technologies (NYSE: CML) or STEC Inc. (Nasdaq: STEC) — I don't recall hearing Xyratex in any of the data storage consolidation discussions. Oddly though, Xyratex has been producing about 10 times the revenue that Compellent has been generating (with a similar income disparity), while Xyratex's market cap is about two-thirds of Compellent's. Better still, the stock boast's a strangely low trailing 12-month price-to-earnings (P/E) ratio of about 4.7.

A-Power Energy Generation Systems is primarily a Chinese energy management holding. It's not priced as low as Xyratex is right now, but the forward-looking P/E of about 6.1 is plenty attractive — and plausible. The kickers for A-Power here are growing institutional ownership and a growing wave of utility and energy acquisitions this year; a sector's merger-mania often develops its own inertia.

Action to Take –> If you're only jumping on a stock because the rumor mill is suggesting it is an acquisition target, you may find yourself stuck with a lousy stock — if you don't even want to own it for the long haul, why would another company want to? Besides, by the time you hear about an acquisition, it's probably too late to do anything about it.

On the other hand, winning the buyout lotto isn't a lost cause. Companies acquire other companies for the same reasons investors do: reliable income, leading technology, market share, etc. Find a good, undervalued company like A-Power Energy or Xyratex, and you'll do one of two things — you'll either (1) own a great stock, or (2) you'll benefit from a buyout. Either way, it's a win.


– James Brumley

James brings a wide degree of experience in the investment industry, including being the Director of Research of a trading newsletter. James' work has appeared in major investing sites such as Motley Fool and Investopedia. Read more…

Disclosure: Neither James Brumley nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: James Brumley
36% Gains From a Takeover — and Two More Stocks That Could Follow

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36% Gains From a Takeover — and Two More Stocks That Could Follow

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5 Investments That Will Profit from a Falling Dollar

October 13th, 2010

5 Investments That Will Profit from a Falling Dollar

Before the economic crisis took hold, the U.S. dollar began a steady downward drift as global investors started to realize that economic growth would be more robust elsewhere in the world. The dollar's slump was also due to never-ending trade deficits, which had long been expected to weaken the greenback, and finally did so beginning in late 2004. During the next 30 months, the U.S. dollar, compared to the euro, fell from 0.86 euros to 0.63 — a -25% drop.

With concerns about the global economic crisis receding, the dollar is back on a downward path. As I noted recently, the dollar “now stands at all-time lows against the Australian dollar and the Swiss franc, a 15-year low against the Japanese yen, and more recent lows against the euro.” [What the Global Currency Wars Mean for Your Portfolio] That recent downward move should have an almost immediate impact: export-related profits are bound to come in higher than forecasts in the fourth quarter of 2010 and the first quarter of 2011 as those earnings get repatriated back into dollars.

Yet it's the long-term impact that investors need to embrace. Not only are foreign-earned profits likely to be pumped up by further dollar weakness, but the competitive positioning of U.S. firms is also bound to improve, setting the stage for rising market share.

Of course, many exporters also have operations in foreign countries, so their expenses will also rise. So if you're looking to cash in on the potential export surge, then it pays to focus on companies with a still-considerable manufacturing presence here in the United States.

Here's a look at five industries and representative companies that I will think will flourish from a weaker dollar…

1. Industrials — Illinois Tool Works (NYSE: ITW)
Of all of the industries that comprise U.S. exports, the industrial sector is the largest by far, with more than $100 billion in manufactured goods shipped abroad annually. Among the major exporters, it's almost impossible to find companies that don't also manufacture some of their production abroad, and Illinois Tool Works is no exception. But this company has ample flexibility and can easily migrate some of that foreign production back to the U.S., as its domestic manufacturing base is under-utilized.

The weak dollar scenario could be a real boon to the company, which faces serious local competition in the international marketplace. Its 800 divisions have a chance to pick up market share, helping sales rise from a projected $15.7 billion in 2010 toward the $20 billion mark in coming years.

2. Agriculture — Smithfield Foods (NYSE: SFD)
The U.S. has become an impressive exporter of commodities — a trend that will only be strengthened if the dollar continues to slump further. Yet it's our livestock that could be the real trade winner. Did you know that Japan is the largest market for imported pork in the world? And did you know that China, which consumes 50% of the world's pork, is at maximum production and may soon become a pork importer? That means China will be ill-equipped to supply the Japanese market, and we here in the U.S. stand to post rising pork exports — especially as the dollar weakens.

Smithfield Foods, which I profiled in this piece, is the world's largest producer of pork. Right now, Smithfield is looking to restrain output to help boost prices. But as global demand for pork exports rises, Smithfield won't have to worry about constraining output much longer.

3. Mutual Funds — Fidelity Export and Multinational Fund (Nasdaq: FEXPX)
This fund has returned just +0.8% on an annualized basis for the past five years. That's right in line with the S&P 500. But a weaker dollar changes everything for this fund. It helps pump up earnings for the companies in its portfolio, and it helps them take market share. This play may be especially timely, as a number of its holdings are likely to speak about the benefits of a weaker dollar in their upcoming conference calls.

The Fidelity Export Fund's top five holdings are: ExxonMobil (NYSE: XOM), Apple (Nasdaq: AAPL), Johnson & Johnson (NYSE: JNJ), GE (NYSE: GE) and Procter & Gamble (NYSE: PG).

4. Media — Disney (NYSE: DIS)
Despite the occasional cultural war, we remain the undisputed kings of global entertainment. Many countries heavily subsidize local film industries to help create domestic blockbusters, but it's the U.S. blockbusters that often take home the local gold in terms of box office receipts. Disney, with interests in theme parks, Pixar movie studios, cruise ships and other forms of entertainment, is truly a global brand. Disney, like other media firms, will be hard-pressed to boost market share simply because the dollar is cheaper, but those foreign-earned profits are likely to be worth even more as the dollar slips further.

Before the global economic crisis hit, Disney was on its way to become a profit powerhouse as EPS grew more than +30% in 2006 and 2007 and topped out at $2.28. Profits subsequently slumped in the economic downturn, but should return to pre-recession levels this year. It may not be long before Disney resumes that upward profit surge: analysts think per share profits can approach $3 by 2012 or 2013. Not bad for a $34 stock with such strong global brand cachet.

5. Software — Oracle (Nasdaq: ORCL)
I'm hesitant to include this stock after it has had a recent strong run, but you can't ignore the appeal of this sector when talking about the global trade picture. Oracle's software is not a price-sensitive product. But the after-market support the company sells in terms of service contracts sure is.

Oracle often needs to make major price concessions on these service contracts to win business away from rival SAP (NYSE: SAP), whose business is denominated in euros. Oracle's business is done in dollars. In a world of cheaper dollars, Oracle can either cut price in the local currency and take market share, or maintain price and boost margins as the dollar falls farther. It's a nice problem to have, and can be said of many other tech powerhouse such as Hewlett-Packard (NYSE: HPQ), Microsoft (Nasdaq: MSFT) or IBM (NYSE: IBM).

Action to Take –> There are already compelling reasons to own these stocks, but a falling dollar makes it all the more tempting to consider these names. Not only that, but a busier export sector creates a virtuous cycle, as support businesses receive more orders to help provide goods and services to these large firms.

The Obama administration realizes the power of a weak dollar, which is why we don't read much about the U.S.'s “strong dollar” approach anymore. Keep an eye on the currency markets. If the dollar's recent slide continues, you can expect to start hearing about these export plays all over Wall Street.


– David Sterman

David Sterman started his career in equity research at Smith Barney, culminating in a position as Senior Analyst covering European banks. David has also served as Director of Research at Individual Investor and a Managing Editor at TheStreet.com. Read More…

Disclosure: Neither David Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: David Sterman
5 Investments That Will Profit from a Falling Dollar

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5 Investments That Will Profit from a Falling Dollar

Commodities, Mutual Fund, Uncategorized

Another Tech Company on the Hunt — Which Stock Will Benefit?

October 6th, 2010

Another Tech Company on the Hunt -- Which Stock Will Benefit?

While companies like Hewlett-Packard (NYSE: HPQ), Intel (Nasdaq: INTC) and IBM (NYSE: IBM) have revved up their acquisitions latesly, Oracle (Nasdaq: ORCL) has been quiet. But this won't last for long. The company has integrated its $7.5 billion deal for Sun Microsystems and also snagged the former CEO of HP, Mark Hurd.

Actually, at the latest analyst meeting, Oracle's CEO, Larry Ellison, talked-up his acquisition strategy, and his thinking has undergone some important changes. After all, he wants to buy chip companies.

Huh? It does seem quixotic. But that's usually the first reaction to Ellison's pronouncements. Wasn't Wall Street skeptical about his plans in 2005 to buy up business software companies like PeopleSoft? But of course, it has paid off. Oracle's stock is up +60% in the past five years, while competitors like SAP (NYSE: SAP) and Microsoft (Nasdaq: MSFT) are only up +18% and +10%, respectively.

But if Oracle wants to keep-up the momentum, it will need to think different. This means essentially expanding into the hardware business.

Ellison points out that Apple (Nasdaq: AAPL) has done this successfully. While not easy to pull off, it can result in more seamless technologies and yes, more revenue opportunities.

With the Sun deal, Oracle has already delved into the hardware business. This is with the Sparc chip, which is a key part of enterprise servers. Consider that Oracle recently launched its Exadata database and cloud-computing platforms, which combine its software with Sun hardware.

OK, so what chip companies will Oracle buy? There are many top operators to choose from, including ARM Holdings, Advanced Micro Devices, Altera, Nvidia, Broadcom and Marvell. All are definitely high-quality companies.

But there are some complications. Keep in mind that Ellison says he wants a chip company for its “intellectual property.” In other words, there was no mention of having large fabrication plants (known as “fabs”). So it's a good bet that Ellison wants a fabless chip company, that is, one that doesn't actually make the chips. What's more, he probably wants to focus on companies that have mostly an enterprise business.

What companies fit the profile? Take NetLogic Microsystems (Nasdaq: NETL), which develops high-speed chips to improve the performance and security of networks. As a testament to the company's technology prowess, there are more than 400 patents in the company's portfolio.

In the second quarter, NetLogic posted a sizzling +192% increase in revenue to $95 million (the sequential increase was +10%). A big boost came from its acquisition of RMI, which broadened the company's product offering.

While the company is still losing money, this is to be expected for a high-growth operator. Besides, there is $201 million in the bank.

Another prospect for Oracle is Mellanox (Nasdaq: MLNX). The company develops sophisticated chips, adapters and cables that connect data centers with storage devices. The technology helps to reduce infrastructure investments, lower energy costs and improve overall performance. As a result, Mellanox has a sterling customer list that includes companies like JPMorgan (NYSE: JPM), Exxon (NYSE: XOM) and Shell (NYSE: RDS-A).

Something else: Oracle uses Mellonox products for its own storage and server products. The technology is even at the core of the Exadata offering. And yes, the financials have been stellar. In the second quarter, Mellonox saw a +58% increase in revenue, to $40 million, and net income of $5.3 million.

Basically, Mellonox is in the sweet spot of major technology trends like cloud computing, virtualization and data-center automation. No doubt, the growth ramp is likely to continue. [A New Tech Revolution Could Lead to Triple Digit Gains for These Stocks]

Action to Take –> Of the two, I think Mellonox would be the most attractive buyout target for Oracle. The companies are already key partners, and Mellonox's technologies are mostly for the enterprise markets. And with its hefty growth rate, Oracle will need to pay a premium price. But Mellonox's attractive fundamentals and unique technologies are likely to entice other bidders to the table. This is something that's happened with other recent deals, such as for 3Par (which sold at a big premium). True, there still may not be a buyout. But even so, the fact remains that Mellonox should continue to be a standout player in the industry.

What about Oracle? While the stock has already made a nice move, the company has a huge slug of cash and a top-flight management team. Oracle has already proven it knows how to make deals work and is ahead of the curve for the next stage of deal making. In other words, combining its powerful software business with hardware will be key for Oracle in achieving the next stage of growth.


– Tom Taulli

Tom has been a stock commentator for 15 years. He has written a best-selling book, “Investing in IPOs,” and become a frequent guest on shows like CNBC and CNN. Tom has also appeared in the New York Times, BusinessWeek Online and Forbes.com. Read more…

Disclosure: Neither Tom Taulli nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Tom Taulli
Another Tech Company on the Hunt — Which Stock Will Benefit?

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Another Tech Company on the Hunt — Which Stock Will Benefit?

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