Microsoft Corp (MSFT)

Have great products. They are undervalued. Great dividend yield. Great margins. Lots of cash. Management has done good things. Thinks they will be more innovative down the road.

(Top Pick Nov 7/13, Up 31.80%) They are not thinking they are competing with AAPL-O anymore. The Surface has come out and it is an enterprise product. Xbox is doing better and they have a good phone. Incredible balance sheet and the change of management has helped them to refocus. 15 times earnings, 3% dividend, $27 billion in free cash flow, gross margins of 68%. That’s what Microsoft is. A great company from a balance sheet perspective.

Has been doing fairly well over the past while. His view is really favourable towards mobile and mobile computing, and he does question what their offerings might be. Unless there are some real projects that come online, they might be behind the curve on the mobile side, and that is really the future of growth on the technology front.

They have done a great job of restructuring their business. They had tremendous growth out of the cloud as they are one of the biggest providers of cloud services. There is an upgrade cycle that is happening and will continue to happen. 90% of all companies use Microsoft. Business runs on the Windows platform and will do so for the next 10-20 years. They cut costs and it dropped to the bottom line. It is trading at 15 times earnings so it is not as cheap as it used to be. There should be earnings expansion to keep this company going.

(A Top Pick Nov 7/13. Up 26.3%.) The numbers were absolutely fantastic in this last quarter. Thinks it will continue to do well. Feels the ultimate high on the stock will be $54-$57.

Thinks management is doing a very good job in changing the strategy and focus. Had a really good run this year. Not super expensive. His favourite in global technology is Apple (AAPL-Q). It has better growth going forward and has a cheaper valuation. (See Top Picks.)

(Top Pick Oct 3/13, Up 43.01%) Still likes it. Thinks it will make a new all time high.

This is almost the law of big numbers. They get so big that they can’t deploy capital properly. There is a replacement of management, which is a good thing. When you’re sitting with buckets of cash, you have to get that cash moving and deployed and you have to do it properly.

Longer-term, he is more positive on this. They have reinvented themselves and moving to more profitable core areas. Thinks there is a lot of inherent value here.

80% of revenue and virtually all its profits come from Windows and Microsoft Office businesses. A reasonably valued way to participate in the growth of the software sector. The key thing in software today is that, as the economy gets better and better, companies have an increased propensity to spend money on software, new plants and equipment, new staff, etc. This company will benefit from that trend.

Had a nice little bounce up with money coming out of the social media stocks. It generates a lot of cash flow. Fully valued now. Trading at about 14X forward earnings. If you own, consider taking some money off the table.

It is long overdue for this stock to start to make a move. He likes their Cloud applications, particularly in the Office365 that they recently launched with the new CEO. Office365 allows you to save to Microsoft Cloud which suspiciously sounds an awful lot like what Windows was doing when they were trying to develop products. Thinks this is pretty positive for them. Expects they will spin this office some point. Yield of 2.79%

Reasonably priced. Not his favourite, but they are doing a lot of good things. PE is lower than GE. A dominant player in their space. It is going to be around for a long time to come.

He looks for companies that are good, but are getting better. This is a company that has been going through a change in management and in focus. Changing their business model from a subscription model to a Cloud-based monthly pay. Ultimately he likes companies that benefit from improving capital spending at the corporate level. Have lots of cash and trades at a very low valuation.

In 2008-2009 when stocks got hammered, this came on his watch list. Right now there are a lot of investors/money managers that really like this. Great company and a leader in its field. Where it goes from here, he has no idea. All of the stocks he buys are under $10, so he has no interest in this one.