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Microsoft Corporation Stock Analysis

Summary

  • My top idea is Microsoft Corporation (NASDAQ:MSFT) stock
  • Market capitalization is over 1 trillion US dollars
  • Rating: AAA (S&P and Moody’s)
  • Competitors: Apple and Amazon
  • Reasons why MSFT will outplay its competitors and emerge as one of the best investments

Strong Fundamentals

In 2019, Microsoft Corporation‘s stock rose by almost 30% with impressive earnings. The company has a highly secure, strong balance sheet and attractive valuations. Microsoft had $134.3 billion in cash on hand at the end of 2019, one of the most massive such stockpiles among all U.S. companies. That the reason why MSFT is among the top stock picks in the S&P 500, NASDAQ 100, and Dow Jones and given the prestigious “AAA” and “Aaa” ratings. MSFT investors also enjoy dividends regularly.

Cramer said on his daily “Mad Money Show“-Tens of millions of workers are stuck at home, which implies that Microsoft is a “huge beneficiary from the lockdowns,” He also added, the stock should not only be bought by investors at current levels, but it should also be labeled the “best tech stock in this market,”

Recurring benefit

It’s 2020, and we are still using Microsoft office tools, it also owns LinkedIn, Skype, Xbox, Azure Bing, MSN, GitHub, Nokia’s Mobile Business, Minecraft. MSFT creates continuous cash flow income from its subscription-based business. Microsoft is still a young player in the cloud market when compared to Amazon Web Services, but it is closing the gap slowly and methodically. Winning the Pentagon contract recently, which was expected to go to Amazon web services, underscores its growing reputation in the industry.

Microsoft Corporation (NASDAQ:MSFT), Microsoft corporate offices, people, sign, building, logo

Northfoto / Shutterstock.com

Global economy

Microsoft targets the whole world and not the U.S. alone. MSFT aims to gain new business deals for its cloud-computing services and produce recurring income from its subscription-based industries worldwide and gives stability for investors amid the COVID-19 crisis. Above mentioned is supported by the lasted news; when Microsoft recently disclosed that the cloud business Azure saw a triple-digit spike in usage weekly in areas undergoing social distancing, as 44 million users logged 900+ million meetings and calling minutes.

Hence the companies that can boost cloud usage will be the ones that emerge victoriously. With such a kickoff in shares, some investors may think stocks can’t go any higher. But with a cloud business that’s thriving, a new Windows 10 O.S. lined up for this year, and perceived solidity in a time of increasing uncertainty, Microsoft Corporation’s stock is assured of moving even higher.

Enduring Growth

Microsoft has metamorphosed from the PC-era software company into one of the world’s leaders in cloud computing and Artificial Intelligence.

If one had invested 100 shares of Microsoft Corporation stock in April 2009, its value after ten years would give almost 700% total return in profit presently. As technology evolves, MSFT continues to be one of the most stable tech companies in the world. Serving an international audience with the most advanced cloud computing and Artificial Intelligence infrastructure, it always comes out with innovative new tech products and services to the future. Microsoft continuously acquires new companies with excellent potential. Just recently, it purchased PromoteIQ, a New York-based company that helps major brands and sellers diversify their eCommerce offerings.

Competing with the rivals

For many shareholders, Microsoft Corporation is one of the best stocks to invest in and hold on forever. Many fund managers and Wall Street analysts are in a “Buy” mode for MSFT, while valuation is fair.

With the U.S. in an economic war with China, and recession fears resonating through the markets, tech capitalists could be forgiven if they look for places to hideout. If we see the rivals of MSFT, Apple isn’t an option now. The trade war with China is impairing its capacity to compete against Samsung. If a recession does happen, clients may not be so willing to spend $1,100 on a new mobile phone.

Alphabet’s, Google, has its problems. Lawmakers and regulators across the globe are equipped to fine and otherwise penalize the Internet giant. Even Amazon could be at risk in an economic decline. If consumer expenditure slows down, sales could reduce for the e-commerce giant. And then there’s Facebook; It’s in the most unpredictable situation of the group. Regulators, consumer groups, lawmakers, and even 2020 administrative candidates are calling for its break up.

Microsoft Corporation Stock: Conclusion

That leaves Microsoft, a firm not too long ago written off as an extinct species. The stock has been on a steady increase in recent weeks amid the long-standing trade war. The company is also announced double-digit growth with 2019 budgetary year net profit up 21.6% year to year and sales up more than 14%. Most of the growth is coming from its cloud business, which competes for head-on with Amazon Web Services and Google. Profits from Microsoft’s productivity and business processes and intelligent cloud units were $22 billion combined in the second quarter compared to $11.1 billion from its computing group. Investors seeking a position in a technology stock but who can’t stomach the risk may flock to Microsoft, driving up the price further.

The aforementioned positive factors don’t entirely insulate Microsoft — or any company — in a recession. But its dominant market positioning, strong balance sheet, and easy access to capital do provide buffers in tough times and so the best choice to invest in the present market.

Disclosure: No Positions

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