Expect More Gains With Microsoft Finally Shedding Its Boring Image

Prior to the novel coronavirus pandemic Microsoft (NASDAQ:MSFT) has always been a solid go-to name for conservative investors. Even when the going was tough during the 2000’s decade, those who held onto MSFT stock were very much rewarded in the following ten years. But with the present crisis that has upturned the globe, the case for Microsoft shares has grown far stronger.

Image of corporate building with Microsoft (MSFT) logo above the entrance.
Source: NYCStock / Shutterstock.com

Indeed, those who prefer to take risks with their money should still consider Microsoft as a robust floor during times of uncertainty. Of course, we have plenty of that right now. When the outbreak first struck us here at home, millions of workers suddenly found themselves setting up their home offices for remote operation.

To be sure, it was a chaotic period, marked by trial and error. Nevertheless, we persevered, which should give you an indicator of why I’m still so bullish about the Roaring 2020s. As Americans, we’ve always had the grit and ingenuity that has made our nation great. Now, we’re on the cusp of multiple technological innovations that will help us maximize our potential.

Of course, one of those profound stories is Microsoft. During the “old normal,” we depended on its business applications because of their universality. That’s much more the case today, as workloads have shifted from the office to the living room. More importantly for MSFT stock, the underlying company can market several relevant products under its Software as a Solution pipeline.

For instance, Microsoft Teams brings several collaborative tools, including video conferencing, file sharing and workflow platforms, under one roof. Further, MSFT protects users from nefarious activities with its privacy and security systems, giving it a leg up over competing services.

MSFT Stock Is a Proven Buy-and-Hold Investment

While there are always risks involved with marketing products that are levered to one-off events — particularly once-in-a-blue-moon pandemics — Microsoft’s pivot is really an organic extension of its core business. As you know, CEO Satya Nadella has done away with unprofitable ventures, revitalizing Microsoft into a focused entity.

A big part of that involved transitioning from legacy businesses into exciting, long-term markets like cloud computing. Therefore, the push toward remote work SaaS applications was going to happen sooner or later. In many ways, the pandemic merely accelerated what management had intended all along.

Not only that, several organizations are reassessing this new way of conducting business. Many firms have already notified their employees that they’ll be working from home through the end of this year. Others are extending this to summer of 2021 or even permanently.

Also, don’t forget that millions of employees have gotten a taste of the digital nomad lifestyle and they enjoy it. There’s a strong segment of society that won’t return to the office, which supports the longer-term narrative of MSFT stock.

But even if the pandemic never occurred, Microsoft will still be a buy. This innovative company has consistently weathered multiple storms over the years, handsomely rewarding its stakeholders. In that way, it’s similar to the companies I discuss in Investment Opportunities, only the stocks there generally have even more room to run.

MSFT stock returns vs. S&P 500 and Nasdaq
Click to Enlarge
Source: Matt McCall Research Team

Just look at the moves in MSFT stock during the 1990s for an example of its enduring appeal. The stock pinged an average year-over-year return of 61.3%, far above the average year-over-year returns of the Nasdaq Composite index and the S&P 500. Admittedly, during the 2000s, the returns dipped to nearly a 4% loss, below that of the major indices.

But the takeaway is that during the recovery last decade, MSFT stock averaged YOY returns of nearly 23%, again above the Nasdaq and the S&P 500. Comparing September to MSFT’s average price in 2019, Microsoft is well above both indices.

Slow Recovery or Fast, Microsoft Will Benefit

Amid the rancor of the political election, one fact rings loud and clear to me. In August, total nonfarm payroll employment rose by 1.4 million, driving down the unemployment rate to 8.4%. Despite governmental turmoil, we are on the course to a recovery.

Breaking down the unemployment statistics by industry, I’m encouraged by what I see. While there’s much work to be done, the majority of employment sectors feature an unemployment rate below the national 8.4% rate. Further, markets that have been hit unusually hard due to the crisis, such as leisure and hospitality, will come roaring back due to pent-up demand.

As I’ve argued regarding the airliners, we’re seeing passenger volume increase. With more people becoming comfortable in this virus-impacted environment, more sectors will see significant improvement in their employment profile.

Of course, this will be a huge lift for bellwether assets like MSFT stock. But should the recovery take longer than anticipated, I wouldn’t fret. As Microsoft has already demonstrated, it’s doing well with the present challenges. In addition, investors can take confidence in the company’s proven history to navigate troubled waters.

It’s true, Microsoft is bound for long-term success. But I want to bring your attention to another growth play that’s worth your time. It’s bound for long-term success that’s perhaps even more impressive, only the space it focuses on is mobile communication.

While several tech titans helped lay the foundation for our hyper-connected society, this company stands to lead a technological revolution that will forever change communication on a global scale.

As InvestorPlace’s chief technology analyst, I’ve worked feverishly with my veteran research team to identify the best stocks to buy in my Investment Opportunities. Over the years, our research has helped millions get ahead of the curve. Our subscribers have enjoyed massive gains in tech titans long before they were kings.

Now, I’m ready to share with you the stock behind the next big development in communication. The company has already inked deals with key mobile phone partners. But it’s bound to become its own king with an approach to mobile interaction that we’ve never seen before … and it’s only a taste of the unique strategies and research you can expect from Investment Opportunities.

On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities. 


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