Historically, most companies focused on one product or service. That eventually saturates the market. Today’s tech companies, particularly software ones, are able to break that cycle with new products or better upgrades to existing software.
Companies that also pivot to other opportunities can create big value for themselves and shareholders as well. That’s why so many of today’s big tech names have continued to increase in value, even as some of them have become multi-trillion-dollar companies.
One up-and-comer for this club is Oracle (ORCL). Shares are already up nearly 40 percent this year, adding strong gains in the past week.
That’s because the cloud database company is adding new enterprise software and working on new product lines that could send shares soaring in the years to come. That even includes the possibility that the firm will be a big winner in the defense space thanks to contracts for protecting cloud data.
Action to take: Shares have surged to an all-time high in recent weeks, but trade at 20 times earnings, a discount to the overall market. With double-digit earnings growth and a fat 34 percent profit margin, however, shares are likely to continue outperforming the market.
The company’s current dividend yield of about 1.6 percent is on par with a 10-year Treasury yield, but with more growth potential in the dividend and share price.
For traders, the September $90 calls, last going for about $3.10, can play the current uptrend for bigger percentage returns. Traders should look to lock in mid-to-high double-digit returns in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may make a trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.