Microsoft Corp (MSFT)

He likes this. For years and years, this lumbering beast, ineptly managed by the 2 founders, finally got wise and brought in a CEO who understands the Cloud. They have so much room to improve their margins and increase their cash flow, and they are doing it.

A good stock and has a reasonable yield. They are trying to reinvent the company, and it looks like they are having some success. He wouldn’t have any qualms about picking this up.

(Top Pick May 19/15, Down 1.98%) It was doing its job. Model price is $49, 53% upside and he still owns it. They are migrating to a mobile chip. All they need to do is innovate. 3.25% dividend.

(Market Call Minute) A great way to play the space so hang on to it.

A perfect company for a buy and hold strategy, and where you have to pick your spots where valuation is important. He started buying this in 2012 at $24+, when it was trading at 8X earnings. Still reasonably attractive and likes its exposure to Cloud computing and its potential. The runway is massive as only 10% of storage is online.

(A Top Pick Jan 29/15. Up 21.51%.) He is continuing to buy this. They are executing very well and have some great products. The Surface was outselling iPad over the holidays. Their Cloud business is doing well. Thinks there is potential for them to do very, very well. Probably worth in the $60 range.

One of the world’s largest software companies and now an emerging global leader in Web services. Trading at 17X earnings. $7 a share in cash on the balance sheet. Dividend yield of 2.72%.

They have increased their dividend nicely over the years. They are reporting their numbers tomorrow afternoon.

Investors are looking for the cloud to be the savior as the PC market is a failing market. But the Cloud has not contributed meaningfully to their revenue. He shies away from it because the stock price reflects success with the cloud, which is highly competitive.

This topped out in 2000, and only recently made a new high going back over the last 15 years. They have their dominant operating system for PCs. Microsoft Azure is a cloud-based enterprise business, and grew 100% for them last year. They are now selling their desktop software as a subscription service, making it a much more predictable business. 3% dividend yield.

(A Top Pick Nov 27/14. Up 19.36%.) Feels this is a changed company because of the new CEO. They have some great products. Throws off lots of free cash. A good story. Thinks it has upside to around $65.

He is finally seeing this getting closer to his model price, which is how he calculates Fair Market Value. His model price is $58.65, a 5% upside. Thinks it has enough momentum to get to $59.50. (See Top Picks.)

A great company that generates a ton of free cash flow, pays a nice yield, increases the dividend over time and has a great balance sheet. They buy back stock also. He likes their online strategy.

Took profits on this a while ago. The stock has done quite nicely, but his issue is that it is a bit expensive in terms of valuation. Trading at around 20X forward earnings with a 10% growth rate. That gives it a 2X PEG ratio. There are several technology names out there that are trading at a better PEG ratio. It gives you a pretty decent dividend at 2.66% yield, but there are other tech names he finds more attractive.

His number 2 position. He classifies it as low tech, but it has everything you want in this market. Wait for a pullback to $38/$39, which it will. He is sure it will pull back to this level. His model is $57.45. He will be taking a lot of profits off his APPL-Q holding at the end of the month.