The technology sector has been performing well, even during the recent market turmoil.

Now, with the markets being picked up by the Fed's rate cut, this sector could really have some room to run and Oracle (Nasdaq:ORCL), a manufacturer and seller of business applications, could be one of the best in the sector right now.

The Oracle Omen
Oracle boosted confidence in the tech sector recently when it releasing earnings that showed considerable strength and growth in the underlying business. Starting three years ago, Oracle went on a tear, buying up more than 30 small competitors to try to eat the lunch of SAP AG (NYSE:SAP). (For greater insight, check out The Advantages Of Investing In Aggresive Companies.)

While Oracle is still trailing SAP in revenues from business application sales, the moves from Oracle CEO Larry Ellison have been paying off in a big way. The company has been consistently producing great numbers, and this recent quarter saw sales grow at the fastest rate in seven years (since the dotcom boom drove demand in 2000).

The benefits of these consolidations have surpassed most expectations. For its fiscal first quarter, Oracle earned $840 million, or $0.16 per share, up 25% year over year.

Another positive from the quarter is that the company reduced its debt by $1.36 billion to bring their total debt balance to $6.24 billion. This looks nice along side Oracle's $6.2 billion in cash on its balance sheet. The company also bought back $530 million of the stock last quarter, and the company's cash position gives the impression that there is room for more. Oracle has a plethora of options to deploy cash, and with how effectively management has been running the ship, I think there is solid room for more growth.

The Whole Picture
Not everything can be good, right? Well, there were some negative points in the quarter. For one, operating expenses were higher than anticipated. Another problem is that about 4% of the revenue growth was from currency valuations. Also, some of the growth was due to Hyperion and Agile, businesses that Oracle acquired in March and May, respectively. I don't think these are major concerns.

The growth in earnings, despite higher operating expenses, signals to me that there is just more opportunity to improve the bottom line. To the latter concern, I think Oracle has been impressive in management of its acquisitions to grow the company.

The Bottom Line
Tech looks attractive, especially now that a weight has been lifted off the market. With money freeing up (or at least unfreezing) in the economy, Oracle should be able to benefit from demand from companies investing in new technologies. The company's management continues to spur growth. I would keep my eyes on other names in technology as well, companies including Google (Nasdaq:GOOG) and Texas Instruments (NYSE: TXN), which have also been providing nice returns.

Looking to cook up a market-stomping stock portfolio? Check out our FREE report "7 Ingredients to Market Beating Stocks" and get started right now!

Related Articles
  1. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  2. Investing

    The Top Businesses Nurtured By Y Combinator

    We look at the top startups that were incubated at Y Combinator, one of the world's most popular business incubator firms.
  3. Investing

    Is It Time To Bet On The iPad Again?

    Apple's focus on iPad has been fairly tepid these past few years. But, the iPad Pro was the centerpiece of the company's latest product announcements. Why?
  4. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  5. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  6. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  7. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  8. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  9. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  10. Stock Analysis

    What Will HP's Split Do to Its Stock?

    Read about Hewlett-Packard Enterprises, a new spinoff company from Hewlett-Packard. Understand how the two companies will focus on different markets.
  1. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!