Microsoft Corp (MSFT)

This peaked out at $54 in 1999. It finally broke out from the high in 2016. In 1999 they earned $.70 a share, and in this past year they earned $3.43 a share. This company is rejuvenated through its Cloud-based business. They reported great earnings tonight. Their Cloud business grew 98% after growing 90% last quarter. Their gross margin widened again, becoming more profitable. Their earnings were up 15%. They are growing their dividend at greater than 15% a year, and that should continue for quite some time. Subscription software sales were up 40% year-over-year. Dividend yield of 1.8%. (Analysts' price target is $98.67.)

An interesting company, because it is an older tech company, but they've got a new life. That new life has come on the back of the Cloud and gaming, and it’s been a very, very big ship to turn. They've done it successfully and deserve a lot of credit. However, the stock price has reflected that optimism, more so than the fundamentals, so the multiples have risen, because there is more optimism in the market.

The long-term outlook is still very strong. The market is expensive and the stock price is expensive, so this is where you want to come in with a disciplined strategy of buying a half position, and let the market dictate when you allocate the next half.

Chart shows this is moving in a tight upwards channel. When this happens and then breaks out, the tendency is for it to go back to the tight channel. This particular one looks like a case of being overbought. The RSI is 80 indicating it is overbought. If you own, trim some.

This is on a momentum run, no longer on a valuation run. For the past 10 years, its earnings and FMV have nicely contained the stock price on the upside. However, in this market, some of these companies are now breaking out and going above where they ought to be. On this company, technically he can give you another 10% on the upside comfortably. After that it would come under the heading of Holy Smokes, where do you think you're going.

(A Top Pick May 15/17. Up 32%.) Struggled for about 10 years, and then started turning in 2009-2010. They've restructured and jumped on the web business, and things have gone well ever since. Business is accelerating now and it is growing faster than a lot of their historical business models. Still has about a 6% free cash flow yield, that is very attractive for a software company. It’s still undervalued and has another 10%-20% to go.

Under the new CEO, the company has been turned around. They’ve entered into the Cloud computing business, and with their domination of small businesses, which is moving into the Cloud, this is the natural one to go for. Thinks it can go through $100. Dividend yield of 1.9%. (Analysts' price target is $94.)

IBM (IBM-N) or Microsoft (MSFT-Q)? Doesn't own either, but of the 2, this is the safer name to own. They are much deeper into their turnaround. Their theme has been Cloud, Cloud, Cloud. There is major growth in the Cloud, and it is the way of the future. 96% of their cash is offshore, so they stand to benefit from returning cash back to the US.

On her list as a potential addition on a pullback. Likes their Cloud-based offering, and thinks it is going to do well going forward.

He loves this company. Optically it is a little pricey, but they have the exposure to the Cloud. All of a sudden, margins are exploding higher. He could see this being a $1 trillion market cap company because of their exposure to the Cloud.

Chart shows a very nice up channel. Look for slight yields on RSI readings to buy. Make sure the stock is at the lower end of the Up channel on a weekly chart, and at the same time have a look at the daily chart for any short-term signals, either confirming or refuting the conclusion.

In many ways, this has gone through a process where it grew up with a monopoly business. Every time you wanted to use a computer, you effectively had to pay this company. Then they branched into other markets where they don't really have that monopoly structure in pricing, and the margins have come down over time. This is a growth business and has a ton of cash. If you are buying as a longer-term dividend play, it's OK here. It's a little rich and he would like to see it correct a little lower. An interesting play.

(Market Call Minute.) Doesn't own this, but it’s on her Watch List. Likes the commercial Cloud business they are growing. It’s a high margin business going forward, and they have a good opportunity to take share in that space.

Buying back shares will be part of what to do with all that money. He does not think that repatriating cash will cause a CEO to pay his employees more. He does not think that repatriating capital will have the impact on the US economy that the government thinks it will.

Tech stocks are all down today. It was interesting to note that MA-N is also down today as they are also a tech company. We are seeing a rotation out of tech into financials, and resources. This part of the Trump tax cut. This is short term noise. These companies have tremendous franchises. This is an appropriate place to wade in. They are a tremendously run company.