This recent market turmoil has separated the market leaders from the laggards, and technology giant Microsoft Corporation (NASDAQ:MSFT) certainly falls in the category of the former. Seemingly unshakable, investors appear to be putting their hard-earned money on companies like Microsoft that exhibit strong long-term growth characteristics with near-term cash flow stability and robust balance sheets.
Microsoft has been a top pick of mine in recent years for these reasons. The fact that this recent pandemic has not in any serious way impaired the earnings capability of Microsoft is remarkable. It’s also not necessarily a surprise, give the utility-like nature of Microsoft’s business model.
Being what many corporations and individuals may deem to be an essential service, most analysts expect a relatively muted decline in top and bottom-line results in the coming quarters. This near-term weakness appears to be overshadowed by strong positive sentiment surrounding Microsoft’s cloud segment and other growth businesses which are key focal points for investors.
For long-term investors, Microsoft is a great buy and hold opportunity, but will likely never be considered a value pick due to the company’s attractive balance of stability and growth. I’d again encourage investors to consider picking up shares of Microsoft on any future dips; the company’s relatively high valuation is likely to stay where it is, so hoping or praying for a discount on Microsoft stock may not materialize, even in more bearish market conditions.
Invest wisely, my friends.
