June 15, 2022- Oracle Corporation (NYSE:ORCL) and SunPower Corporation (NASDAQ:SPWR)
The two best stocks to buy now either crushed recent earnings or have tailwinds of government support.
After the market carnage continued for a fifth consecutive day, two of the best stocks to buy now are Oracle Corporation (NYSE:ORCL) and SunPower Corporation (NASDAQ:SPWR).
As investors brace for a 75, potentially 100 bps rate hike, it’s time to stop playing around with junky stocks that lack the fundamentals or catalysts to withstand current headwinds.
Stocks like Oracle, which saw its share price crater until yesterday (June 15, 2022), must be considered. It’s a tech blue-blood, boasts strong fundamentals, and recently shocked the market with an outstanding Q4 earnings report.
Then there’s solar energy giant SunPower Corporation. Solar stocks are seeing momentum because of recent government actions. This stock, in particular, could see its net income ballooning 234.5%. Morgan Stanley‘s recent price target upgrade could give the stock a 35.5% upside and adds further context to its growth potential.
On Tuesday (June 14, 2022), the Dow and S&P declined for the fifth straight day while the Nasdaq eked out a small gain. The Dow fell 152 points or 0.50%, the S&P 500 dipped 0.38%, and the Nasdaq rose 0.18%.
We will see what’s on tap Wednesday with the Fed’s latest rate hike.
Stocks very likely haven’t bottomed. Yet that’s all the more reason to buy high-quality companies at a discount and begin dollar-cost-averaging. ORCL and SPWR are two of the best stocks to buy now at current levels due to various catalysts.
Oracle Corporation (NYSE:ORCL)
The tech blue-blood surged 10+% after its latest earnings and could see 25+% of room to run.
Oracle is a prominent player in the software industry and is a long-term tech blue-blood similar to the likes of Microsoft, Apple, and IBM. It provides enterprise information technology products and services worldwide. Oracle has truly built itself into a prominent player with cloud software offerings, enterprise performance management platforms, and services for supply chain and manufacturing management, human capital management, cloud advertising and customer experience, and more.
Yet until this week, the stock was like any other tech stock in 2022. Before it announced earnings after Monday’s (June 13, 2022) close, the stock was down 26% year-to-date and over 39% below its all-time high.
Then Oracle reported earnings, and everything changed.
Why did the ORCL stock surge on Tuesday (June 14, 2022)?
After Oracle reported Q4 earnings, its stock popped and closed 10+% higher. This also marked the most the stock jumped in six months.
The Company shook up the investment world after tech’s bloodbath and the overall market downturn. It beat top and bottom-line estimates and saw notable cloud sales momentum.
Revenue came in at $11.84 billion vs. the estimated $11.66 billion. This also marked a 5% year-over-year increase led by an 11.5% year-over-year increase in the Americas. Adjusted EPS also came in at $1.54 vs. $1.38 estimated.
Oracle CEO Safra Katz noted that demand for the Company’s infrastructure cloud business is why these numbers are so strong.
Revenue from Oracle’s strategic back-office cloud applications business also increased by 24%.
ORCL’s latest acquisition could transform healthcare.
Oracle keeps expanding its client base, including recent deals with companies like JPMorgan, PNC, Santander, Credit Suisse, UBS, BDO, Qube, and more.
But its latest acquisition could be the Company’s most significant move of all.
Just this week, Oracle officially completed the acquisition of Cerner. Cerner is a major supplier of health information systems, and Oracle’s data and modern cloud infrastructure could genuinely disrupt the entire healthcare industry.
Healthcare is a nearly $12 trillion industry that continues to evolve. Today, it relies heavily on data storage and will do so even more in the future. Healthcare data storage can include everything from images collected by the radiology department to notes taken by the front-line physicians, patient data, and health records.
ORCL remains undervalued and backed by solid margins and growth prospects.
Despite its post-earnings rally, Oracle remains criminally undervalued. This is yet another reason why this stock is one of the best stocks to buy now. Oracle trades at just a 13.2x forward P/E ratio, and before its post-earnings rally, it touched oversold territory with a 30.89 14-day RSI.
You can paint an even more bullish case for this stock because management appears to be aggressively buying back shares. A few fundamental indicators look incredibly strong for the Company as well.
Oracle, first and foremost, is immensely profitable, with a 79.1% gross margin. It also operates efficiently based on its 37.3% operating margin and generates a solid 13.2% unlevered ROA.
But a truly eye-popping measurement of how Oracle is a well-oiled machine is its 256.5% ROCE. Oracle is generating quite an impressive return from the book value of its common equity.
It also doesn’t hurt that following its blowout quarterly report, Finbox projects its net income to grow 113.6% and average 27.3% over the next five fiscal years.
Oracle’s rock-solid dividend history is the cherry on top.
One of the reasons Oracle is one of the best stocks to buy now in this unstable environment is its stable, growing dividend. It currently has a 2.0% dividend yield and has increased it for 9 consecutive years.
This is roughly 350.00% higher than the sector median.
Being the dividend aristocrat that Oracle is, its dividend is also projected to grow another 33.3% at a 16.4% 5-year CAGR.
Analysts are waking up to ORCL’s upside.
In the last week alone, JP Morgan maintained an OVERWEIGHT waiting on ORCL, while Cowen & Co. maintained OUTPERFORM.
In the last 3 months, a total of 16 Wall Street analysts have offered a 12-month price target, which currently sits at an average of $88.71. That’s good for a 25.44% upside from June 14, 2022’s $70.72 close. The ORCL stock also has a street-high price target of $115.00 and a low price target of $72.00.
ORCL’s year-to-date low and high are $89.58 and $63.76, respectively.
SunPower Corporation (NASDAQ:SPWR)
Morgan Stanley’s recent price target hike sees this pure solar play running potentially 33.5%.
Solar energy is projected to grow at a 20% CAGR and exceed $200 billion by 2026.
The U.S. Energy Information Administration (EIA) also projects solar energy to grow the fastest of all renewable energies through 2050.
Until this month, however, solar stocks took some severe lumps. But the tide could be shifting following two major moves from the Biden administration. It invoked the Defense Production Act to spur domestic solar panel manufacturing. It also removed import tariffs on solar panels from Cambodia, Malaysia, Thailand, and Vietnam for two years.
Needless to say, solar stocks are beginning to look like some of the best stocks to buy now. The sector is starting to catch fire with what seems like the entire world trying to wean itself off fossil fuels due to Russia and climate change.
Solar technology and energy services provider SunPower Corporation is a perfect way to play the current energy environment. It prominently serves the industry with a plethora of solar, storage, and home energy solutions. Most importantly, it owns a 41% market share among the top 60 builders in California and has five national agreements among the top 20 builders in the U.S.
SunPower dragged its feet in the year’s first half and touched a 2022 low of $12.78 roughly a month ago on May 12, 2022. Since then, the stock has been red hot, rallying 28.95% to its June 14, 2022, close of $16.48.
SunPower’s latest earnings report shows considerable growth potential.
On May 5, 2022, SunPower released Q1 2022 earnings results. Although the Company beat ESP estimates by $0.01 and maintained full-year guidance, it turned heads with its top-line results and customer growth.
Revenues rose 45.9% year-over-year to $350.28 million and significantly beat the consensus estimate of $317.56 million. The Company added 16,500 new customers, an increase of 40%. It also grew its backlog by 169% to 13,800 bookings- a company record.
This may only scratch the surface of the Company’s full-year and long-term potential. On the earnings call, SunPower CEO Peter Faricy highlighted the above figures and emphasized demand from consumers looking toward sustainable energy sources. He was also sure to highlight the following two growth catalysts:
- A 70,000 new customer homes pipeline driving growth in 2022.
- Discussions with First Solar to co-develop the world’s most advanced residential solar panel.
Perhaps that’s why Finbox projects SunPower’s net income to grow a jaw-dropping 234.5% and average 84.8% over the next five fiscal years.
Morgan Stanley just bumped its price target; several other analysts have done the same since April.
Need another reason why SPWR is one of the best stocks to buy now? Look no further than its recent price target increases.
Morgan Stanley was the latest to do so. On Monday (June 13, 2022), despite the market’s carnage, the firm hiked its price from $21.00 to $22.00, which suggests a 33.5% upside from June 14, 2022’s $16.48 close.
Other analysts since April have also hiked their price targets, including the following:
- Cowen from $18.00 to $20.00
- Piper Sandler from $20.00 to $24.00
- JPMorgan Chase & Co. from $20.00 to $21.00
- Bank of America from $13.00 to $23.00
In total, 11 Wall Street analysts offered 12-month price targets for SunPower in the last 3 months. SPWR’s average price target currently sits at $20.73, representing a 25.79% upside from June 14, 2022’s closing price of $16.48. The stock has a street-high forecast of $26.00 and a low forecast of $6.99.
SPWR’s year-to-date low and high are $12.78 and $25.24, respectively.