In the past 30 days, 33 analysts have boosted their EPS estimate for this giant tech company. The shares have a current dividend yield of 2.04%, paid quarterly.
Microsoft Corporation (MSFT)
From The Investment Letter
While reviewing both the holdings in this portfolio and the performance of the market as a whole, the one striking difference between the two is the absence of four of the biggest darlings on Wall Street. Microsoft, Amazon, Alphabet, and Apple have had an extraordinary time of it over the past few years. So much so, these stocks have almost become the stock market.
My shock at realizing that I have failed to include any of these stocks in the portfolio was tempered by the fact that our stocks managed to perform just as well as the market as a whole in 2019, with much less risk. The question I found myself asking was simple: Can such a performance be matched in 2021 without at least some of these companies in our portfolio?
After studying each company closely, I have decided that the answer to that question is probably no. All of these companies have outperformed the market during the past two years. The S&P 500 Index is up some 17% during that past 24 months. During that same period, Alphabet is up 26%; Amazon is up 45%; Apple is 77%, and Microsoft is up 82%.
If you were crazy enough to put all your money into just these four stocks over the past two years, you would have made three times the money of those who played it safe and just bought the S&P 500.
However, let us not forget the lawyerly warning about investments, past performance is no guarantee of future results.
Of these four darlings of Wall Street, I am of the opinion that Microsoft Corporation (MSFT) is the best of the bunch. The company has been a star performer for much of the past four years, and I see little that will stop it. Although the stock price has tripled over the past three and a half years, the stock multiple sits at thirty. That may seem high, but not for a company playing such an important role in cloud computing.
This company is quite capable of producing annual sales growth rates of 15% or better. If you are concerned about going all-in after the run-up in price, I suggest you feed money into the stock slowly over the course of the year. This should help if we suddenly get that correction everyone on Wall Street is so worried about.
David C. Jennett, The Investment Letter, P.O. Box 6170, Holliston, MA 01746, 800-542-5018, January 16, 2020