Oracle Corporation (ORCL): A Software Powerhouse with Upside Potential

The Cloud is good for Oracle

Oracle Corporation (NASDAQ:ORCL) offers a cloud-based computing service known as Oracle Cloud. salesforce.com, inc. (NYSE:CRM) has snatched a piece of cloud market share, but Oracle is still the dominant force in this space. Oracle has higher margins and greater resources to keep its current dominance in the market. This ability to spend more on R&D combined with a loyal customer base is Oracle Corporation (NASDAQ:ORCL)’s biggest competitive advantage.

Oracle has recently acquired Nimbula, a provider of cloud infrastructure management software. Nimbula’s technology helps organizations manage infrastructure resources to provide service, quality and availability. Nimbula’s product is complementary to Oracle Corporation (NASDAQ:ORCL) and is expected to be integrated with Oracle’s cloud offerings. This investment is likely to complete in the first half of 2013.

Final words

After Oracle Corporation (NASDAQ:ORCL)’s third quarter results, its investors are showing signs of worry, but this weak quarter was a one time event. Considering the company’s greater margins, even as compared to giants like International Business Machines Corp. (NYSE:IBM), Oracle will continue to growth. With a reasonable price-to-earnings ratio, an analyst-estimated mean target price of $37.65 and a 10% upside on current levels, Oracle is good investment option in the software industry.

Red Chip has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines Corp. (NYSE:IBM). and Oracle Corporation (NASDAQ:ORCL).

The article A Software Powerhouse with Upside Potential originally appeared on Fool.com.

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