Opinions
Ashley Misquitta, CFA
Microsoft Corp
MSFT-Q
PARTIAL BUY
Oct 22, 2018
Stock price when the opinion was issued
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Premium contentLikes the stickiness to both personal and corporate clients -- once you get into the network, it's very hard to get out. Cloud business has improved significantly. If quantum computing ever comes to the forefront, MSFT is there.
ROIC is 23% vs. WACC of 9%. This gives them lots of cashflow to pour money into the next greatest thing. R&D development is important, given how fast things are changing these days. Yield is 0.72%.
Excellent company that meets his criteria. If you made him choose one or the other today, he'd have to say META based on valuation (with the assumption that the investor would hold a position for the long run). MSFT trading ~37-38x PE, whereas META is in the mid-high 20s.
One of his top-performing stocks. He targets $514. Very well-run company. Boasts solid moats in enterprise software and operating systems, which ensures recurring revenue and customer retention. Azure Cloud remains second only to AWS. The valuation may be elevated, but MSFT is good now for selling some calls given volatility. Keep the calls pretty sure, writing calls around $490-495.
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A great business positioned well in OS and the Cloud for enterprises--which is a strong secular tailwind. They are still gaining business as they move to a subscription-based system. MSFT generates a lot of free cash flow that will increase dividends over time. They hold a lot of cash that they will repatriate from overseas. A good business, and, yes, a little expensive, so he would add to a position to some degree, though not huge.