Microsoft Corp (MSFT)

(A Top Pick August 1/17 - Up 25.7%.). Still like it. A solid dividend. Free cash flow yield over 5%. Cash on the balance sheet. Accelerating growth profile with the switch to cloud business. There is upside here.

Has been hitting on all cylinders for several quarters. He has owned it. As its valuation has expanded, he has reduced the amount he owns. Their platforms are still growing. Their fundamentals are driven by cloud adoption.

Valuation is slightly rich. Its payout ratio is two, whereas Facebook and Google is one. Its upside is a recent beat while their Cloud numbers are strong. They have transitioned well and turned the ship around. This could be a core name in a rising market.

He was wrong on this one. But they have done a fantastic job with their cloud segment (30% of what they do now). It surprised a lot of people. (Analysts’ price target is $103)

Do you like the company? He likes the business – it is not cheap on a multiple of free cash. It has become an annuity type investment. It deserves a higher than peer multiple. It is a good business with good cash flow. Yield 2%.

Positive. A conservative tech company. Cloud business is positive. Good earnings and dividend. Should survive market volatility, not decreasing much. Many people use their cloud and other services which will continue.

PNC Financial or Microsoft? Likes both spaces. PNC: Trading at higher multiples than the big banks like JP Morgan. The stake in Blackrock is positive. Buy on a dip or lower valuation. Microsoft: Likes it, but if you can buy both, buy both.

This peaked out at $54 in 1999. It finally broke out from the high in 2016. In 1999 they earned $.70 a share, and in this past year they earned $3.43 a share. This company is rejuvenated through its Cloud-based business. They reported great earnings tonight. Their Cloud business grew 98% after growing 90% last quarter. Their gross margin widened again, becoming more profitable. Their earnings were up 15%. They are growing their dividend at greater than 15% a year, and that should continue for quite some time. Subscription software sales were up 40% year-over-year. Dividend yield of 1.8%. (Analysts' price target is $98.67.)

An interesting company, because it is an older tech company, but they've got a new life. That new life has come on the back of the Cloud and gaming, and it’s been a very, very big ship to turn. They've done it successfully and deserve a lot of credit. However, the stock price has reflected that optimism, more so than the fundamentals, so the multiples have risen, because there is more optimism in the market.

The long-term outlook is still very strong. The market is expensive and the stock price is expensive, so this is where you want to come in with a disciplined strategy of buying a half position, and let the market dictate when you allocate the next half.

Chart shows this is moving in a tight upwards channel. When this happens and then breaks out, the tendency is for it to go back to the tight channel. This particular one looks like a case of being overbought. The RSI is 80 indicating it is overbought. If you own, trim some.

This is on a momentum run, no longer on a valuation run. For the past 10 years, its earnings and FMV have nicely contained the stock price on the upside. However, in this market, some of these companies are now breaking out and going above where they ought to be. On this company, technically he can give you another 10% on the upside comfortably. After that it would come under the heading of Holy Smokes, where do you think you're going.

(A Top Pick May 15/17. Up 32%.) Struggled for about 10 years, and then started turning in 2009-2010. They've restructured and jumped on the web business, and things have gone well ever since. Business is accelerating now and it is growing faster than a lot of their historical business models. Still has about a 6% free cash flow yield, that is very attractive for a software company. It’s still undervalued and has another 10%-20% to go.

Under the new CEO, the company has been turned around. They’ve entered into the Cloud computing business, and with their domination of small businesses, which is moving into the Cloud, this is the natural one to go for. Thinks it can go through $100. Dividend yield of 1.9%. (Analysts' price target is $94.)

IBM (IBM-N) or Microsoft (MSFT-Q)? Doesn't own either, but of the 2, this is the safer name to own. They are much deeper into their turnaround. Their theme has been Cloud, Cloud, Cloud. There is major growth in the Cloud, and it is the way of the future. 96% of their cash is offshore, so they stand to benefit from returning cash back to the US.