While the recent upheaval in the markets could last into next week and up through the Federal Reserve meeting, one thing remains pretty clear. Even if rates are raised now and in December, the federal funds rate would still be barely at 1%. That is a way below the historical average and hardly one that would crimp commerce. One sector that should continue to hold up well the rest of the year is technology, and one firm we cover here at 24/7 Wall St. has some top picks for the rest of 2016.
A recent Merrill Lynch research report highlighted five top technology picks for the rest of the year, and all of them have a big cloud presence. While better suited for aggressive growth accounts, all these companies have solid and stable franchises and look to be leaders well into the future. All of course, are rated Buy at Merrill Lynch.
Some may be less familiar with this company, but Merrill Lynch is very positive on it. Cornerstone OnDemand Inc. (NASDAQ: CSOD) develops and sells software that automates the processes involving employee recruiting, performance management, compensation management and succession planning. Its offerings are sold under the software-as-a-service (SaaS) model, hosted by Cornerstone and sold on a subscription basis.
The analysts cite the company’s position as the learning and performance leader in the large enterprise arena. They also see improving sales productivity and think there is upside to current booking estimates. That upside should lead to solid earnings and margin gains.
The Merrill Lynch price objective for the stock is $52, while the Wall Street consensus target is $48.88. Shares closed most recently at $44.09.
This top software stock has traded sideways since the spring and looks to be putting in a nice cup and handle formation. Oracle Corp. (NYSE: ORCL) develops, manufactures, markets, sells, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems and related services worldwide.
The company licenses its Oracle Database software to customers, which is designed to enable reliable and secure storage, retrieval and manipulation of various forms of data. Its Oracle Fusion Middleware software aims to build, deploy, secure, access and integrate business applications, as well as automate their business processes.
With shares trading at 15 times estimated 2016 earnings, and with a solid free cash flow yield, many analysts also feel that Oracle’s 12C database cycle starts to contribute during calendar 2016, and the stock could very well be poised for what they term a breakout year. After recent investors meetings, some analysts raised fiscal year 2017 cloud margins to 66% from 63% and earnings per share to $2.80. Merrill Lynch also believes that the software giant may be on the verge of a multiyear database product cycle.
Investors receive a 1.5% dividend. Merrill Lynch has a $48 price target, and the consensus price objective is $44.29. Shares closed Wednesday at $40.25.