No. 2: Microsoft
Q2 Return: -5%
YTD Return: +18%
Investor: James Altucher
James Altucher’s pick of Microsoft (NASDAQ:MSFT), which he’s riding for a second straight year, hasn’t let him down.
In the first quarter, it was the third-best-performing Dow Jones stock and still is near the top. MSFT slowed after reaching a 52-week high, but it still boasts high double-digit returns that nearly double the S&P’s.
Plus, its valuation — one of James’ original reasons for liking Microsoft — remains low, at around 11 times earnings, the company sits on piles of cash, and a 2.6% dividend remains attractive to investors.
And, on top of its many products — Windows, Office, the Xbox video game console and servers — Microsoft now is taking on Apple‘s (NASDAQ:AAPL) iPad with its very own tablet, the Surface. It could be a game-changer for Microsoft, which has yet to successfully navigate the tablet business, and it’s looking promising early on.
Microsoft isn’t completely in the clear, though. While revenues and operating income were up strongly in the most recent quarter, net income actually declined to $5.1 billion, and Entertainment & Devices continued to struggle. But for now, it’s our second-best performer through the first half of the year.