MSFT Stock: Microsoft Is Killing It Under Our Noses

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If you’ve ever attempted to catch a knife with your bare hands, then you know what it’s like to jump into a plummeting stock. “Buy low, sell high,” they say, but nobody ever really knows if that day’s weakness is the definitive low point. Microsoft (MSFT), however, may be a falling knife worth catching.

Buy MSFT Stock on This Dip -- The Company  is Stealthily Killing ItYes, it’s possible MSFT stock may end up sliding a little lower. It’s equally possible, however, the current MSFT stock price has already hit or come close to hitting its low point.

Better to be in a little too early than to get in a little too late.

Yes, Microsoft

Extreme bullishness on Microsoft usually isn’t politically or socially correct. The company is an aging dinosaur that’s losing relevancy, has the wrong leadership and sells second- and even third-tier products.

A funny thing happened on the road to nowhere though … Microsoft kept on growing the top and bottom line. The company is on pace to post revenue growth in nine of the past ten years, and has boosted its bottom line in seven of those ten years (and it would have been in eight of those years had it not been for an unusual expense last quarter).

All told, annual sales and profits have more than doubled over the course of the past decade. Oh, and the MSFT stock price also doubled at one point during that time, and is still up 55% for the past ten years, even with the 14% pullback since August’s high.

Not bad for a company that ten years ago was still licking its wounds from the embarrassingly bad Vista operating system, while at the same time Google (GOOGGOOGL) was securing its spot on the top rung of the Internet’s hierarchy.

Today’s Microsoft isn’t the same company of ten, or even five years ago. And an investment in MSFT stock isn’t even the same investment it was two years ago. That’s not a bad thing, however, as the Microsoft of today is quietly even more potent than the company we knew and loved yesteryear.

Microsoft has more growth lined up than the market may be expecting.

Three key clues point in that direction:

Restored Credibility in OS Design: Although it’s not without criticism, Windows 10 has been a rousing success. It’s now been installed on 75 million machines, and, for the most part, has been favored more than Windows 7 or Windows 8. Granted, by giving it away, Microsoft made exactly zero dollars on all that critical success. The money to be made in operating systems, however, is on the back burner.

The New Microsoft Office: Despite free cloud-based and downloadable office productivity software gnawing away at Microsoft’s flagship Office suite, the company’s subscription- and cloud-based answer is gaining real traction. In less than a year, Office 365 closed the gap between it and then-market-leading Google office apps. Now, large companies are choosing Office 365 over Google’s office productivity apps at a pace of 34.3% to 21.9%, respectively.

Microsoft Is Killing It With Hardware: Last quarter, Microsoft sold $713 million worth if its Surface Pro 3 devices, up 44% on a year-over-year basis. That may be just the beginning for the so-called hybrid line of devices, though, that offer users the combination of a computer and a tablet without sacrificing the functionality of either. The upcoming Surface Pro 4 is going to be in a class all its own, finally giving consumers and businesses the solution and performance they can’t get with anything else. And that’s just one of several new products Microsoft has in its lineup that could turn consumers’ heads.

Bottom Line on MSFT Stock

Potent and underestimated or not, there’s still no denying it’s tough to be interested in jumping into Microsoft while the MSFT stock price looks like it’s still trending lower. But, as Baron Rothschild explained it, the time to buy is when there’s blood on the streets. You may not find the exact bottom, but many investors have missed out on huge opportunities holding out for what looked like the exact bottom … a bottom that only never quite looks like it’s been made until well after it doesn’t matter.

Long-term investors can get into MSFT stock here at a beaten-down price and a forward ratio of 13.5 times earnings. Given everything else working in the company’s favor at this point, that’s a good enough reason to wade in now.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/msft-stock-price-microsoft/.

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