Opinions
Kim Bolton
Microsoft Corp
MSFT-Q
TOP PICK
Aug 28, 2024
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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At beginning of August reported revenues were just shy, lowered guidance, so stock pulled back. 12-month price target of $490. He's adding now, and wants to get it back to a 7-8% position. Yield is 0.7%.
(Analysts’ price target is $501.65)Rule of 40: If revenue growth rate plus profit margin = or exceeds 40%, then it's a good buying opportunity. For MSFT right now, FCF margin is ~30%, revenue growth is just shy of 16%, and that comes to 45-46%.