Sentiment Should Drive MSFT Stock Higher
By Dan Burrows
Microsoft (MSFT) has become something of a tech-industry punchline, but MSFT stock actually had a heck of a year. More importantly, Microsoft stock looks like it could outperform the broader market in 2014, too.
MSFT stock is up 36% for the year-to-date, beating the S&P 500 by nearly 10 percentage points. Not bad for a company that’s become an also-ran in the most important revolutions in tech for years, notably search, social and mobile.
However, MSFT remains an enormously profitable company, and even though PC sales are slowing down as consumers opt for mobile devices like tablets, MSFT stock still benefits from the company’s dominant position among enterprise customers.
Microsoft stock also looks reasonably priced for new money, with the forward price-to-earnings multiple (P/E) of 12 offering only a slight premium to its own five-year average, according to data from Thomson Reuters Stock Reports. Additionally, MSFT stock comes with a generous and stable dividend, currently yielding 3.1%.
But the best reason to buy Microsoft stock for 2014 is that the company is seeking a new CEO, and if it lands the right person — like Ford (F) CEO Alan Mulally — shares will get a lift on sentiment alone.