Oracle - the future is bright

When your business goes digital you need somewhere to store the data. And that is where Oracle comes in, providing the database software that allows users to store, backup and retrieve that data easily.

Sounds pretty basic but practically every company on earth bigger than a corner shop needs a database and Oracle is the market leader.

In the UK the National Health Service is gradually moving away from patients carrying their own notes around to having central databases that store all that vital information. This is not the sort of data that can be stored in a spreadsheet or an Access database or even a free database product like mySql. The sheer quantity and confidentiality of the data means that an enterprise solution must be used and Oracle is the prime candidate.

So Oracle is in a growing market and has been for the last 30 years. But what about the financials?

ORCL has a non-GAAP trailing PE of 15 and analysts estimate that it will grow at about 15% a year for the next 5 years. It has a cash mountain of about $9 Billion which it is using to fund share buybacks, acquisitions and its recently started dividend payments. Its non-GAAP margin is 46% and this figure just keeps rising as the proportion of its income that comes from software maintenance increases.

ORCL is currently trying to purchase Sun Microsystems - a move which will see Oracle offering hardware products for the first time. It is also a great chance to increase the profitabiliy of Sun by getting its cost base under control.

My time has run out but ORCL looks good as a purchase for the very long term. With dividends, share buybacks, a cash mountain, margin expansion and constant growth it ticks all the boxes. How many companies can you say that about?