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JimVanMeerten (63.02)

Mr. Softy isn't so soft

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July 27, 2011 – Comments (0) | RELATED TICKERS: MSFT

Modern civilization can't exist without air, food, water, electricity and sewers. Life without Microsoft is unthinkable.  Our world is depended on PC's and PC's have become dependent on Microsoft.  The question is not will Microsoft exist, the question is just how much money they will make.

The chart on Microsoft (MSFT) says it all:


Microsoft Corporation (MFST) develops, manufactures, licenses, and supports a range of software products and services for various computing devices worldwide. The company’s Windows & Windows Live Division segment offers Windows operating system, Windows Live, and Internet Explorer. It offers Windows operating system, which include Windows 7, Windows Vista, and Windows XP Home, as well as Windows Live suite of applications and Web services. Microsoft’s Server and Tools segment provides Windows Server operating systems, Windows Azure, Microsoft SQL Server, SQL Azure, Visual Studio, Silverlight, System Center products, Biz Talk server, Microsoft consulting services, and product support services. This segment also provides enterprise consulting and product support services; and training and certification to developers and information technology professionals, as well as builds standalone and software development lifecycle tools for software architects, developers, testers, and project managers. The company’s Online Services Division segment offers online information products, such as Bing, MSN portals, and channels; and an online advertising platform for publishers and advertisers. Microsoft’s Microsoft Business Division segment offers Microsoft Office, Microsoft SharePoint, and Microsoft Dynamics ERP and CRM, as well as Microsoft Office Web Apps. The company’s Entertainment and Devices Division segment develops, produces, and markets the Xbox 360 platform; PC software games; online games and services; Mediaroom, an Internet protocol television software; Windows Phone and Windows Embedded device platforms; the Zune digital music and entertainment platform; and application software for Apple’s Macintosh computers, Microsoft PC hardware products, and other devices. This segment also involves in retail and marketing of packaged versions of the Microsoft Office system and the Windows operating systems. Microsoft was founded in 1975 and is headquartered in Redmond, Washington. (Yahoo Finance)

Factors you should consider:

Barchart technical indicators:

1 - 80% Barchart technical buy signal

2 - Trend Spotter buy signal

3 - Above its 20, 50 and 100 day moving averages

4 - 10 new highs and up 9.50% in the last month

4 - Relative Strength Index 63.95%

5 - Trades around 27.68 which is above its 50 day moving average of 25.36 

Fundamental factors:

1 - Most Wall Street brokerage firms consider the stock a core growth holding and the stock has a position in the Dow Jones Industrial 30.

2 - Wall Street brokerage analyst presently have 12 strong buy, 10 buy, 9 hold and only one negative recommendation on this stock

3 - Sales are projected to increase by 6.00% this year and another 5.70% next year

4 - Earnings estimated for this year are a modest increase of 2.60% this year and a better 9.10% next year with a annual increase of 9.93% for the next 5 years

5 - The P/E ratio of 9.7 is way less than the 27.0 ratio the stock traded in 2006

6 - The P/E ratio is also almost half of the rest of the market

General investor sentiment:The stock is widely followed by the readers of Motley Fool with the 15,136 readers expressing an opinion voting 87% that the stock will bat the marketThe more experienced All Stars voted a more positive 91% for the same resultSummary: Microsoft (MFST) is a core position and deserves to be in every long term portfolio.  The future forecasts is for increases in sales and earnings and if the former P/E ratios are ever reached investors could see a 20.00% annual rate of return including dividends over the next 5 years.

Charts and technical data provided by Barchart

Jim Van Meerten is a Marketocracy Master

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