By Contributor,Smith Collection,Trefis Team

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Oracle (ORCL) stock could be an excellent option to capitalize on the momentum. Why? This is due to its strong margins, low-debt capital structure, fair valuation, and positive momentum. Here is some data.

Revenue Growth: Oracle experienced revenue growth of 9.7% LTM and an average of 10.2% over the last 3 years.

Long-Term Profitability: Approximately 35.6% operating cash flow margin and an average operating margin of 30.3% over the last 3 years.

Strong Momentum: Currently in the top 10 percentile of stocks in terms of “trend strength” – our exclusive momentum metric.

Room To Run: Despite its current momentum, ORCL stock is trading 13% lower than its 52-week peak.

While revenue growth is beneficial, this choice centers on maintaining momentum with quality — which we assess through margins (indicative of pricing power / a robust business model) and capital structure (not overly laden with debt).

For a brief overview, Oracle offers cloud software as a service, industry-specific cloud solutions, application licenses, license support, an enterprise database, a development language, and middleware services.

Comparison of ORCL with S&P500 Median

However, do these figures convey the entire picture? Read Buy or Sell ORCL Stock to determine if Oracle still possesses an advantage that can withstand scrutiny.

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This is one perspective on stocks. Trefis High Quality Portfolio assesses far more factors and aims to mitigate stock-specific risks while providing upside potential.

Stocks Like These Can Outperform. Here Is Data

Here is how we conduct our selection: We evaluate stocks with > $2 Bil in market capitalization, high operating and CFO (cash flow from operations) margins, no incidents of more than 15% revenue decline in the past 5 years, reasonable valuation, a low-debt capital structure, and strong momentum as defined by our proprietary momentum metric.

Below are statistics for stocks using this selection strategy from 12/31/2016 to 6/30/2025.

Average 12-month forward returns of nearly 15%

12-month win rate (percentage of selections returning positive) of approximately 60%

But Consider The Risk

That being said, Oracle is not exempt from large declines. It fell nearly 77% during the Dot-Com Bubble and dropped over 41% during the Global Financial Crisis. The Inflation Shock was also harsh, with a 40% decline. Even smaller events — such as the 2018 Correction and Covid Pandemic — caused it to decrease around 19% and 29% respectively. Strong fundamentals are important, but during sell-offs, Oracle can experience significant pullbacks.

The Trefis High Quality (HQ) Portfolio, composed of 30 stocks, has a history of consistently outperforming its benchmark, which includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. What is the reason for this? Collectively, HQ Portfolio stocks have generated better returns with lower risk compared to the benchmark index; providing a more stable investment experience, as highlighted by HQ Portfolio performance metrics.

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