After missing revenues for the past three consecutive quarters,
tech bellwether Oracle (
) seems back on track with better-than-expected results for the
second quarter of fiscal 2014.
The company reported earnings of 66 cents per share, outpacing the
Zacks Consensus Estimate by two cents and the year-ago earnings by
a nickel. Revenues rose 2% year over year to $9.28 billion and
comfortably surpassed our estimate of $9.18 billion.
Improving hardware operations as well as stable revenues for
software license updates and cloud software subscription helped the
company to beat on the top line despite the difficult comparisons.
This suggests that the software giant is on the verge of a recovery
amid slow IT spending (read:
3 Sector ETFs Crushing the Market in 2013
The company's database business, low cost engineered systems
(Oracle Virtual Compute Appliance), and higher subscription
revenues would continue to fuel growth. Further, Oracle is shifting
to the fast-growing cloud market and is revamping its hardware
business, which would be an added advantage to its long-term growth
With that being said, Oracle expects revenues to grow in the range
of 2%-6% (in U.S. dollar terms) for the third fiscal quarter buoyed
by 1%-11% growth in new software license and cloud subscription
revenue and negative 2% to positive 8% growth in hardware business.
It also projects earnings per share in the range of 68-72 cents,
which is slightly above the Zacks Consensus Estimate of 67 cents.
Impressed by the revenue beat and the better hardware business,
revised their target prices upward on the stock. This move swept
away the negative sentiments on the software maker and left many
feeling bullish on the stock's future.
In fact, ORCL shares soared nearly 7% and reached a multi-year high
of $36.96 on Thursday trading on elevated volume of three times
more than the normal trading day. However, the shares were up 6%, a
little lower than the high, at the close.
The stock currently has a Zacks Rank #2 (Buy), suggesting that this
trend can definitely continue in the near future (read:
Santa Claus Rally: 3 ETFs on the Nice List
Given the strength in Oracle and the solid run-up in its share
price, investors could make a concentrated bet on the following
three ETFs. These products have the largest allocation to the
software giant and could be worth a look for investors seeking to
ride out the recent surge in the stock (see:
all the Technology ETFs here
iShares S&P North American Technology-Software Index
This ETF provides exposure to the software segment of the broad
U.S. technology space by tracking the S&P North American
Technology-Software Index. The fund holds a small basket of 58
securities with Oracle taking the second spot at 8.58% of total
The fund is quite popular with an AUM just below one billion
dollars, while volume is moderate as it exchanges nearly 78,000
shares a day. The product charges 48 bps in fees and expenses
and was up about 3.70% in the past five trading sessions. IGV has a
Zacks ETF Rank of 3 or 'Hold' rating with High risk outlook.
Market Vectors Wide Moat ETF (
This ETF follows the Morningstar Wide Moat Focus Index and provides
equal-weighted exposure to 20 U.S. securities that have a unique
sustainable competitive advantage in their respective industries.
Here, Oracle occupies the sixth position in the basket, accounting
for 5.24% of total assets.
The product is pretty spread out across various sectors with
healthcare, financials, industrials, and information technology
taking the double-digit allocation. The fund has accumulated $516.4
million in its asset base while it sees a good volume of nearly
134,000 shares a day. Expense ratio comes in at 0.49% and the fund
added nearly 2.7% over the past five days.
iShares Dow Jones US Technology ETF (
This is easily the most popular ETF in the broad tech space with
AUM of nearly $3 billion and average daily volume of roughly
317,000 shares. The product tracks the Dow Jones US Technology
Index, giving investors exposure to 142 U.S. equity stocks while
charging 45 bps in fees and expenses (read:
Guide to China Technology ETFs
Oracle takes the seventh spot in the basket with 4.32% share. The
product is heavily skewed toward the hardware and equipment
segments, as these make up for half of the portfolio, while
software and computer services take the remaining.
IYW returned 1.5% in the past five trading sessions. The ETF has a
Zacks Rank of 2 or 'Buy' rating with High risk outlook.
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ISHARS-NA TEC-S (IGV): ETF Research Reports
ISHARS-US TECH (IYW): ETF Research Reports
MKT VEC-WIDE MT (MOAT): ETF Research Reports
ORACLE CORP (ORCL): Free Stock Analysis Report
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