Microsoft Corporation (NASDAQ:MSFT), for the longest time was showing a tremendous amount of stability and consistency in its stock price. There has been very few bullish or bearish runs over the years, and this legacy tech company has just continued to be reliable and dependable in many portfolios. But it got to a point recently where it seemed that some may have finally gotten frustrated and had considered dropping their positions.
But then, a bull run started, and the stock finally broke free of its $28-$29 range and was soon trading past $33 a share, which is noteworthy considering Microsoft Corporation (NASDAQ:MSFT) has been considered a PC software company, and PCs were going the way of the Commodore 64 by some analysts. So where does this bull run come from, if Microsoft is supposedly so tied to Windows and PC software?
CNBC’s Jim Cramer tried to shed some light (see video on next page) on the subject of Microsoft when he spoke on “Squawk on the Street” Monday.
“I like the idea that there’s a ‘sum of the parts’ here that is much bigger than people realize,” Cramer said in regards to Microsoft Corporation (NASDAQ:MSFT). He noted that Microsoft has a multi-billion-dollar cloud business and a similar level entertainment business with Xbox. “Suddenly you have to look at this company as a different animal.”
Cramer believes that while the tech sector is cheap (running about 12 times earnings on average), he believes Microsoft specifically is an under-valued stock because of its overall business portfolio. He noted that several firm had downgraded Microsoft shares in anticipation of a weak earnings report. “Instead, it was the opposite,” Cramer said. “They were strong. The entertainment and device business is terrific. … I thought that the quarter was excellent.”
“I like the fact that the company has, to me, been proving the doubters wrong,” he said.
While Cramer is bullish on Microsoft Corporation (NASDAQ:MSFT) as a whole, he was especially excited about the entertainment part of the business – namely, involving Xbox and its correlated software and services. “I would love, love, love a piece, if they were to spin out Xbox,” he said. “Xbox plus Netflix, if they bought Netflix then you would see that this company has a lot of weapons.”
What are your thoughts? Are you buying what Cramer is selling about Microsoft Corporation (NASDAQ:MSFT)? Are you in a buying mood for Microsoft stock at these current levels? Why or why not? Let us know your thoughts in the comments section below.
See Cramer’s full comments in the video on the next page: