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Oracle Poised to Break Out

David Becker
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Enterprise software developers are poised to perform well in the first half of 2014 as spending for technology picks up. The stock price has performed remarkably well on the back of robust earnings and a recent announcement that it had entered into an agreement to acquire Responsys (NASDAQ:MKTG) , a leading provider of enterprise-scale cloud-based B2C marketing software for $27 per share in cash or approximately $1.5 billion. Responsys is used by B2C firms to manage marketing interactions across email, mobile, social, display and the web.

The 52-week range of Oracle (NYSE:ORCL) is $ 29.86 – $38.34, and the stock hit a 52-week high on the last day of 2013. Earnings per share increased 8% in its latest quarter, and the three year growth rate of earnings is 12%. Sales were up 2% quarter over quarter and the three-year growth rate of sales was up 4%. The company has a profit margin that is very robust near 45%. The price to earnings ratio is very reasonable at 14, and the company only has 41% debt.

Recent insider buying makes the stock look attractive. Larry Elison the Chairman and CEO purchased 3.2 million shares of the stock on December 26, 2013 for a total value of 46 million dollars. Dorian Daley purchased two blocks one of 100,000 share and another for 50,000 shares on December 26, 2013 for a total value of 2 million and 1 million dollars respectively.

The technical outlook is strong as the stock heads for resistance which would be a 52-week high. Momentum is very strong as the MACD (moving average convergence divergence) index prints at hits its highest level in the past 12-months. Support is seen near the 20-day moving average near 36 which is a good place to purchase the stock.

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