The technology industry has been attracting renewed investor interest thanks to continuing digitization of virtually every industry, and the large-scale adoption of hybrid work structures. Following an extended tech sell-off earlier this year, rejuvenated investor optimism last week drove the tech-heavy Nasdaq Composite to its all-time high.

Moreover, tech stocks have outperformed the broader markets over the past month, as evidenced by the Nasdaq Composite’s 4.2% gains compared to S&P 500’s 1.7% returns.

Given this backdrop, we think that the recent slump in mega-cap stocks Oracle Corporation (ORCL) and Cisco Systems, Inc. (CSCO) should reverse soon. And because the  demand for quality software services is rising, these companies are poised to generate solid growth.

Oracle Corporation (ORCL)

With a $224.89 billion market capitalization, ORCL provides enterprise information technology services internationally. The company offers cloud software applications and hardware products and after sales services through direct and indirect channels. Its Oracle Fusion Cloud Enterprise Resource Planning (ERP) Software has been named a Leader on the 2021 Gartner “Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises” list for the fifth consecutive year.

On May 30, the Tasmanian government digitized its  COVID-19 vaccination program with Oracle Health Management system. This software offering should boost ORCL’s financials significantly.

Amid the rising demand for ‘Arm technology computing,’ in late May ORCL announced its first Arm-based compute offering, OCI Ampere A1 Compute. The product should attract new customers to the company globally.

ORCL’s revenue increased 8% year-over-year to $11.23 billion in its  fiscal fourth quarter, ended May 31. Its operating income grew 5% from its  year-ago value to $4.54 billion, while its net income improved 29% year-over-year to $4.03 billion over the period. The company’s EPS increased 38.4% year-over-year to $1.37.

A $42.34 billion consensus revenue estimate for the current year represents  a 4.6% improvement from the prior year. Analysts expect the company’s EPS to come in at $0.97 in its fiscal first quarter, ending August 31, 2021, representing  a 4.3% rise year-over-year. ORCL also surpassed the Street’s EPS estimates in each of the trailing four quarters.

ORCL has gained 17.8% year-to-date. The stock has gained 42% over the past year. However, it  lost 3.1% over the past month and 8.1% over the past five days to close yesterday’s trading session at $77.99.

ORCL has an overall rating of B, which equates to Buy in our proprietary POWR rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

ORCL has a grade of B for Value and Quality. It is ranked #10 of 128 stocks in the Software-Application industry.

Beyond what we’ve stated above, we have also rated ORCL for Momentum, Stability, Sentiment, and Growth. Click here to view all ORCL’s Ratings.

Click here to check out our Software Industry Report for 2021

Cisco Systems, Inc. (CSCO)

CSCO designs, manufactures and sells internet protocol based networking and other information technology products. The company operates through three geographic segments: Americas; Europe, Middle East, and Africa; and Asia Pacific, Japan, and China. It has a $224.11 billion market capitalization.

On June 15, CSCO unveiled its new 5G industrial router portfolio. Given the broad coverage and high connectivity of these routers, they are expected to be a big hit in the market.

On June 9, Cisco Meraki announced the expansion of its IoT and WAN portfolios to include new technologies to support hybrid workforces around the globe. In the era of digital transformation and work structures, this service offering should help CSCO maintain its position as market leader.

CSCO’s revenues increased 6.7% year-over-year to $12.80 billion in its fiscal third quarter, ended May 1. Its operating income grew 1.5% from its  year-ago value to $3.47 billion, while its net income improved 3.2% year-over-year to $2.86 billion. The company’s EPS increased 4.6% year-over-year to $0.68.

Analysts expect CSCO’s revenues to increase 7.1% year-over-year to $13.02 billion in its  fiscal fourth quarter, ending July 2021. A $0.82 consensus EPS estimate for the current  quarter represents  a 2.5% rise from the same period last year. CSCO also surpassed the Street’s EPS estimates in each of the trailing four quarters.

Shares of CSCO have gained 13.6% over the past year, and 16.4% year-to-date. However, they  have lost 1.6% over the past month and 4.9% over the past five days to close yesterday’s trading session at $53.18.

It is no surprise that CSCO has an overall B rating, which equates to Buy in our proprietary POWR Ratings system.

The stock also has an A grade for Quality, and a grade of B for Stability. Among the 55 stocks in the Technology – Communication/Networking industry, CSCO is ranked #7.

To see additional CSCO Ratings for Growth, Value, Sentiment, and Momentum, click here.

ORCL shares were trading at $78.50 per share on Tuesday afternoon, up $0.51 (+0.65%). Year-to-date, ORCL has gained 22.34%, versus a 13.42% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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