Out of all the blue chip stocks that have been on my watch list for quite some time, Microsoft Corporation (NASDAQ:MSFT) is one I wish I had bought a long time ago.
This is a stock that has never become cheap, or even affordable, particularly in the past few years. As a result, I’ve never been able to justify this company’s valuation, which has continued to (correctly) price in very high levels of growth over the past 10 years.
I do understand that this is a company and stock that is unlikely to every have a "reasonable" valuation, and will be thus viewed by growth investors as a growth-at-a-reasonable price option.
Determining what is reasonable is the key, and even with the late-March dip we had, this stock never got to a level that I, or most value investors, would look at as fundamentally cheap, unfortunately. Some analysts now believe that higher valuations are here to stay, and in that case, Microsoft may be viewed as a reasonable investment at these levels.
In my view, markets are likely to remain uncertain for some time.
Accordingly, I view reaching for yield or growth right now to be a bad idea. The stock market may remain detached from reality for a while. However, I do see another significant leg down from here.
Whether or not investors will be able to buy Microsoft stock at a better price is another question, as I do see the company’s business model as relatively recession-proof. This is a good thing for investors holding stakes in Microsoft thus far.
Invest wisely, my friends.
