Microsoft Corp (MSFT)

A good company. They’ve taken this from being a business where you would periodically buy an upgrade to your software. More and more people are buying licenses where they pay a certain amount per year, and are guaranteed access to the current version. That turns it into a kind of utility, resulting in you having to pay if you want to use your computer. Very heavily involved in Cloud, not as strong a position as Amazon (AMZN-Q), but probably the #2 position.

What has been working for this company is their Cloud services platform. Amazon (AMZN-Q) started in that space, targeting towards the start-ups and entrepreneurs, but Microsoft, with their huge relationships, have really done a good job, and that has been doing really, really well for them. If you aren’t in this, you may have missed the boat at this point.

He likes the Web services. This has had a good run over the last year, but thinks it is justified by the evolution of the company picking up LinkedIn. A real competitor to Amazon and Web services. Dividend yield of 2.1%. (Analysts’ price target is $82.00.)

Dividends have been growing well since they first initiated them about 10 years ago. In their last quarter, they were up 10% in constant currencies. Commercial Cloud annualized revenues run rate is now $18 billion, and the growth has them on track to meet their goal of $20 billion. A quality company, with a good platform in all the right areas. They should be able to dominate the Cloud space.

Starting to pull back due to the recent rotation of the techs. The chart shows it has done nothing but make new highs, higher highs and higher lows. It is getting a little pricey when you look at the metrics in terms of the PE relative to the growth rate, but for a decent dividend paying name in the Tech space, this is a name that people like to have. The Cloud space is doing very well for them and the software has begun to rebound. Watch the valuation. Flipping out of this, might be an opportunity.

This company went through a very, very strong growth period. It has run up the valuation ladder and then has come down. The fundamentals of revenue growth, cash flow growth and earnings growth have been steady and uninspiring over time. People now have faith in the new CEO and the Cloud, so it is going up the valuation ladder again. This is an OK buy here. A little bit expensive. He thinks there are lots of other technology companies to look at.

This is dominant for enterprise relationships. Of the 3 companies that are in Cloud-based computing, this is the one with all the corporate relationships. They are signing up long-term contracts with an enormous number of corporations. Their Cloud-based business has grown 93% in the last quarter. Their software services is growing nicely. Dividend yield of 2.2%. (Analysts’ price target is $77.)

There is a huge installed base of Windows systems globally, and this company has a 93% share of the desktop market. Also, they are making a transition to a Cloud company. They are selling services and all kinds of interesting stuff now. He is a big believer and a big fan of the company.

This blue-chip stuff that you want to invest in, in the Tech sector. They are going to connect in market services with Amazon (AMZN-Q). A great balance sheet with tons of cash. Trading at around 18X 2019 earnings. Thinks it still has another 20%-30% to go. Dividend yield of 2.3%. (Analysts’ price target is $75.)

This has been a remarkable story. It was a business that wasn’t doing much, but all of a sudden they pivoted, and are now competing on the infrastructure side with Amazon (AMZN-Q) on networking and Cloud computing sides. That is now a very good chunk of the business and is driving growth which gives investors interested giving a re-rating of the valuation.

This has been on a valuation ladder. For a lot of years it was the darling as a high, high growth company, and deservedly so with a very high multiple. Then it went out of favour and earnings didn’t grow as fast, and it went down the ladder on valuation, to what would now be described as old tech, trading in a low teen multiple. It is now back up the ladder, but in anticipation of new things happening. Some of those new things are happening, but haven’t shown up yet on the income statement. We are really not seeing earnings growth, the way you would expect for a company trading at the multiple it is trading at. He would step aside on this.

Feels their earnings were a little soft. The whole buzzword is the Cloud. This company clearly has their game back, and he would be very happy to continue owning if you have it.

This has been a great company ever since they threw Steve Bulmer out. The problem is that it is so large. It is hard to imagine them doubling in size over the next 5 years, and he always hopes for his stocks to double in the next 5 years. However, he does own a lot of this. They pay a dividend and have a nice free cash flow yield. They are in the right areas of technology. You are going to make money with this, but you are not going to get rich.

(A Top Pick Feb 2/16. Up 25.38%.) A nice performer. One of those great tech companies that is sticking with what is working and evolving with technology. They and Amazon (AMZN-Q) are neck and neck for Web services now. Amazon has the early lead in that business, but this company is better positioned to potentially become the longer-term winner because of their historic legacy relationships with businesses. 10% of their market cap is in cash. They pay a nice dividend and buy back a lot of shares. Thinks it is going higher.

MSFT-Q vs. IBM-N. If she had to choose, her preference would be MSFT-Q because of their cloud business which will grow. IBM has not been able to figure out how to grow their top line. Both have cash overseas and will benefit if there is repatriation of cash policy changes.