In a challenging economy, companies don't want to hire, but they're willing to spend on technology that can boost productivity. After its 2009 purchase of Sun Microsystems, Oracle looks poised to capitalize on that strategy.
Combining hardware and software, Oracle's new Exalogic Elastic Cloud seeks to be the premier system for cloud computing, the trend of using the Internet to maintain applications and data. Analysts expect the Redwood City, Cal., company's profits to climb 18.6 percent, to $1.98 a share, for the fiscal year that ends this May. At $29.95, the stock trades at 15 times that number. Oracle, which instituted its first dividend in 2009, yields just 0.7 percent, but it has the muscle to easily boost the payout.
Genuine Parts Co.
Sluggish demand for new autos suggests that many drivers will be holding on to their old cars for at least another year, and maybe longer. Meanwhile, the recovery in the manufacturing sector has boosted industrial spending. Both trends bode well for Genuine Parts Co . The company, a supplier of replacement parts for both the auto and industrial markets. Car parts account for half the sales of this Atlanta-based company, which operates stores under the NAPA name. Analysts expect earnings to advance 10.9 percent, to $3.25 per share, in 2011. At $50.55, the stock, which yields 3.2 percent, looks attractively valued at a price-earnings ratio of 15, on the lower end of its historic range. Genuine Parts has boosted dividends 54 straight years.
Freeport-McMoran Copper & Gold
Freeport-McMoran Copper & Gold, the world’s largest publicly traded copper miner, is a play on surging demand for minerals in emerging markets—especially in China.
Copper prices are volatile, but the slowing rate of new copper discoveries, the decline in average ore grades, and concern that many mines will be depleted by 2021 mean that the metal’s price should stay high. With copper prices currently near record highs and demand expected to outstrip supply in 2011, Freeport’s profits are expected to grow 17 percent for the year. The Phoenix, Ariz., miner brings in so much cash that in October it boosted its dividend by 80 percent, to an annual rate of $2 a share. At $112.87, the stock yields 1.8 percent and trades at 11 times expected earnings.