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The 90’s Called. They Want to Know Why You Are Buying Oracle.

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Oracle’s shiny 90’s buildings

Really?  Larry Ellison: yacht racing and a $50 million Japanese-style house.  Sweet.  But is the stock really a buy now?  Sure they bought Netsuite so Netsuite would stock eating their lunch.  And sure they are a cloud company now.  But it seems to me like the bulk of what they do is still databases and ERP – maybe tools too.  And Netsuite did have high 30’s growth, but still.  I would much rather own MongoDB (MDB) for database growth.  Let’s take a look at the revenue growth.

2016: 0%

2017: 5%

2018: 1%

2019e: 0%

2020e: 2%

2021e: 2%

And right now you get to pay 4.6 times revenue for that.  Over the last 10 years, that multiple has range from 3.2 times to 5.3 times – so you are closer to the top than the bottom.  And sure Oracle (ORCL) can manufacture 10% EPS growth this year (dropping to 6% next year), but for how long?

The stock is overbought on an RSI basis and recently completed a Wave indicating the end of a trend.  The stock is up 18.3% this year, besting the Nasdaq (QQQ) by almost 2.5%.

The dividend yield is only 1.8%.

Look, who knows what will happen with Oracle or with the economy?  But it seems pretty pricey with this global economic backdrop.

Here are some things from the 90’s I would like more than Oracle’s stock: grunge, a Roxette album, a Blockbuster video card, a Sony Walkman, and a Nintendo Gameboy – just sayin’.

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