Apple, Inc., Oracle Are Artisan's Picks For Value In The Tech Sector
Tech stocks have a reputation for being overly prone to hype, and a business model with a heavy focus on market share over profits makes value investors wary. But that reputation is largely undeserved...
Artisan Partners: Apple and Oracle combine value and quality
Artisan Partners Asset Management Inc ( APAM) typically looks for cash-producing companies with a strong balance sheet and valuations around 8-12X earnings. Even with those classic value-investing criteria, the fund is still putting money into high quality tech companies. They give the example of Apple Inc. ( AAPL), who has been selling at a low double-digit multiple by their estimation, and is "growing faster than the market, has a higher dividend yield, has a significantly above-average financial profile and yet trades at a large discount to the market." The reports argues that Oracle Corporation ( ORCL), the world's second largest software firm, is in a similar situation, with a high return on equity, strong market position in a field with high barriers to entry, and strong margins. "The company is financially quite strong with around $15 billion in net cash on its balance sheet. Shares sell for about 11X free cash flow before adjusting for its sizable cash position, which is near a historic low valuation." -By Michael Ide