Investment Ideas

Microsoft: If I Could Own Just One Stock

I believe in owing a prudently diversified portfolio of long-term investments. However, if I could own only one stock, I’d want it to be something with with a lot of growth, value, steady cash flow, and competent leadership. Microsoft (MSFT) fits that bill. Under the leadership of Satya Nadella, Microsoft has experienced an impressive turnaround in recent years whereby its top-line growth has been fueled by its cloud computing solutions (which continue to gain ground on Amazon Web Services (AMZN)). And although the valuation appears higher compared to its own history, it has transformed itself from a boxed product seller to a subscription-based SaaS provider, thereby warranting a higher valuation (i.e. Microsoft is still inexpensive versus its peers). Not to mention, the company’s massive steady cash flow creates a lot of opportunity and eliminates a lot of risk. In this report, we analyze Microsoft’s business model, its market opportunities, competitive positioning, valuation, risks, and finally conclude with our opinion on investing.