Stock markets all across the world closed lower in Friday trading. This followed weaker growth numbers in China and the EU, weakness that has sparked fears that the global economy is slowing down. With the increased fears of a recession, it is only rational to look into companies that have strong fundamentals, companies that can survive a market correction. Under these conditions, Oracle Corporation (NYSE: ORCL) comes across as a company that has what it takes to offer a mix of stability and growth even in a market slowdown.
One of the factors that give Oracle an element of stability is its strong innovation culture. The company has for years maintained an edge over its competitors, both through internal R&D, as well as through acquisitions that give it a strategic edge in the market. For instance, the company is a leader in data management. The company’s Oracle Autonomous Database is an industry first and revolutionizes how companies manage data. With this database tech, the company is assured of a steady growth in revenues. That’s because even in a market slow down, companies would still need to manage data in an efficient and secure way. This gives Oracle an element of strength and stability, no matter the direction that the market takes.
Oracle Corporation (NYSE: ORCL) also has a large clientele that is spread all across the world. Oracle has more than 400,000 customers worldwide. The company’s wide network of the institutional clientele is enough to sustain Oracle’s revenues under any market conditions. That’s because Oracle sells them well-researched solutions to their technological needs. As such, even in a slow market, any institution looking to retain operational efficiency would retain Oracle’s services. It’s an integral part of their operations.
Looking at the company’s books, Oracle comes across as a relatively strong company. One of the company’s fundamentals that stands out is its strong position in terms of the capacity to pay its debts. One of the greatest risks to the stock markets is another series of a rate hike by the Federal Reserve. This could put a strain on the stability of over-leveraged companies. Oracle is one of the companies that are in a position to handle its debt obligations, even in a high rates environment. The company has a current ratio of 3.42. This is an indicator that it has enough liquidity, and its generating high enough revenues, to cover its debt obligations. This makes it a relatively safe bet, even in an environment where interest rates are rising.
With such stability both in terms of its product offering and a strong cash position to help it keep innovating, Oracle Corporation (NYSE: ORCL) will remain stable even in a down market. This is in spite of having a relatively high beta of 1.04 that would, in theory, mean that it would drop more than the market in case of a correction. Its fundamentals negate this possibility making it a low risk, stability and growth stock.