We made it to the final selection in the series raptors: ORCL.
music selection: “Slient Lucidity” — Queensryche
By most counts Larry Ellison is a megalomaniac. The kind who builds a rock solid company. His products are high margin and “sticky.” Thus his margins are stable and his cash flow is strong. P/E of Oracle Corporation (ORCL) is under 19, P/B is under 4, and P/S is under 5. We can earn a current dividend yield of 1.4% on this 190 billion mega cap. Twenty three percent of market cap is tied up in cash and marketable securities. This more than covers long term debt. Bankruptcy isn’t even on the horizon. And fresh cash in the form of free cash flow is gushing in at a 14 billion dollar a year pace. This dividend is increasing and the company is repurchasing shares.
At today’s price we can get ORCL150717P00043000 for 1.11. That is 23.56% annualized for capital at risk over 40 days. Seriously? You can outpace Warren Buffet by investing in big slow moving mega caps with a mountain of cash on the balance sheet? The markets must be mad.
Devour your prey raptors!