Like Boeing, Buy Microsoft on the Dip...
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Jonathan Yates
Like Boeing, Buy Microsoft on the Dips

Due to its recent earnings disappointing Wall Street, Microsoft (NASDAQ: MSFT) is down sharply.  This is much like Boeing (NYSE: BA) falling late last week as a result of a fire on a 787.  As detailed in previous articles on this site, these should be utilized as buying opportunities to buy shares of blue chip companies at a discount to hold for the long term.


Like Boeing, Microsoft is an industry leader.

There are many reasons for that.  Microsoft is a very profitable company.  The operating margin is 35.60%.  That results in a superb profit margin of 21.60%.  The average profit margin for a company on the Standard & Poor’s 500 Index is under 10%.

Microsoft also tops the average dividend paid by a member of the Standard & Poor’s 500 Index.  For Microsoft, the dividend yield is now over 2.60%.  If the stock continues to dip, the dividend yield will obviously rise.  For a member of the Standard & Poor’s 500 Index, the average dividend is around 2%.  With plenty of cash on the balance sheet and a low payout ratio, Microsoft easily afford to increase its dividend and initiate a buyback program to reward shareholders.

There is certainly tough competition for Microsoft.  It no longer registers eye-popping growth figures.  But it is still dominant in the business network sector.  As a result, on a quarterly basis, both sales and earnings-per-share are very strong.  Due to having little debt on its balance sheet, the revenues produced go to expanding operations.

With its strong dividend, robust cash position and industry-leading products and services, Microsoft is a stock to by on the dips and hold for the long term.  Now trading around under $32 a share, the mean analyst target price for Microsoft over the next year is $35.22.  On June 24 of this year, Griffin Securities reiterated it “Buy” rating for Microsoft and raised the target price to $41 a share.


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