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Real-Money Stock Picks / Messed-Up Expectations Portfolio
|Subject: Re: MSFT on the radar||Date: 12/9/2010 12:22 AM|
|Author: mjuarez||Number: 85 of 1169|
Good earnings with Win7 so far, disliked by the market. Not expected to grow very much. Nice review on the DMC board
Just found the MUE Portfolio, nice idea. I've been investing using the same general methodology (albeit much less structured) for a couple of years now... have done pretty well up to now. I'm also a RIG investor, started buying around $50... and have been buying more since.
As far as MSFT is concerned, I'm not so sure I agree it's a good choice for the portfolio. Being a good MUE stock, IMHO, should require two things:
- Recent event or events that make the company/stock disliked by the market.
- Once that event fades away, good growth expectations, or massively undervalued based on fundamentals.
MSFT does fit the first criteria (very profitable, disliked by market). However, it is not undervalued, considering future growth potential (current P/E of ~11, 5-year CAGR of 8%), and it has absolutely nothing on the horizon that excites investors or tech users. Windows market share is shrinking as a percentage of the market (witness iOS and Mozilla/Chrome market share of late), and except for the XBox, every new market it tries to get into, it fails miserably (music player (Zune), phones (Kin, and now Windows Phone 7), tablets (?)). The Office market is admittedly strong... but seriously... how can you justify charging companies $200 per seat every 2 years for a new version of Word and Excel... that do exactly the same things they did literally 15 years ago? Companies are realizing that also... and now Google Apps offers you 80% of the functionality... for exactly $0. And just yesterday... we finally caught a glimpse of the future, Chrome OS. No need for an OS anymore... if it's all in the cloud.
MSFT has been milking Windows and Office divisions for an entire decade... yet, somehow, stock price has been stuck between $25-$30 all that time, even after making billions of dollars a year. MSFT invests $8B a year in "research and development". Apple? Not even $1B per year. I think it's pretty obvious who has been the most innovative during the last decade.
I read another post where you were pondering AAPL vs MSFT for the portfolio. I agree, AAPL may not be an ideal MUE stock (definitely not priced to fail), but that doesn't make MSFT a good one.
Just my $0.02.
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