Microsoft Corp (MSFT)

Longer-term, he is more positive on this. They have reinvented themselves and moving to more profitable core areas. Thinks there is a lot of inherent value here.

80% of revenue and virtually all its profits come from Windows and Microsoft Office businesses. A reasonably valued way to participate in the growth of the software sector. The key thing in software today is that, as the economy gets better and better, companies have an increased propensity to spend money on software, new plants and equipment, new staff, etc. This company will benefit from that trend.

Had a nice little bounce up with money coming out of the social media stocks. It generates a lot of cash flow. Fully valued now. Trading at about 14X forward earnings. If you own, consider taking some money off the table.

It is long overdue for this stock to start to make a move. He likes their Cloud applications, particularly in the Office365 that they recently launched with the new CEO. Office365 allows you to save to Microsoft Cloud which suspiciously sounds an awful lot like what Windows was doing when they were trying to develop products. Thinks this is pretty positive for them. Expects they will spin this office some point. Yield of 2.79%

Reasonably priced. Not his favourite, but they are doing a lot of good things. PE is lower than GE. A dominant player in their space. It is going to be around for a long time to come.

He looks for companies that are good, but are getting better. This is a company that has been going through a change in management and in focus. Changing their business model from a subscription model to a Cloud-based monthly pay. Ultimately he likes companies that benefit from improving capital spending at the corporate level. Have lots of cash and trades at a very low valuation.

In 2008-2009 when stocks got hammered, this came on his watch list. Right now there are a lot of investors/money managers that really like this. Great company and a leader in its field. Where it goes from here, he has no idea. All of the stocks he buys are under $10, so he has no interest in this one.

Thinks there is a lot of upside. New management is going to transform the company from software to a Cloud company. This is important because margins are very, very scalable in Cloud. They become more of a service company where they get dollar fee for using their software. Software is very easy to install and maintain, because it is actually maintained and updated by Microsoft. Because of this, there is a cost-saving standpoint from using it.

Past pick Jan 28, 2014, up 5.44% Long term investment. A 12 year level of resistance. He bought on the breakout. a 3 to 5 year play for him. New games, new CEO, lots of new catalysts that could push this stock up.

They generate enough money that they can reinvest in their businesses. They have developed things like Xbox, which has gone to 17% of their revenue. For the stock to move higher there is going to have to be a lot of upside catalysts in terms of their earnings, so it is probably range bound. For long-term holders, he feels the stock is probably worth $40.

From a fundamental point of view, this is a company that had a monopoly and this monopoly is quickly disappearing. Outside of the PC, which is becoming less of a big story, it doesn’t have the monopoly that it needs to have. Because of this, it is looking to move into other markets, and those other markets carry much lower margins. Good company longer-term but it is in the process of reinventing itself. Dividend is very safe. If you can get this lower, you might be able to trade it. Still early in the transition process.

Stock has been stuck since about 2000 and about the $35 range. Broke out and is now coming back a little to test it. This is a long-term stock that he may hold for a few years. It won’t be without its ups and downs but the earnings a week ago just proved that this company is not a one trick pony. Great story.

(Market Call Minute.) Thinks the value is in the low $40s.

It is dead money. He has little on the books.

This company is up against some headwinds. Primarily anchored in PCs and had trouble because of the size of their operation and how reliant they are on the PC market to really have a meaningful opportunity in other areas. They have become quite a cash cow. The market is telling him that they are not very confident that the growth rate, that this company used to be able to deliver, is going to happen in the future. They are not growing the way they were and they don’t have the opportunity.