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Microsoft Stock Shows Promise, despite Valuation Concerns

Microsoft (NASDAQ:MSFT) is perhaps the world's leading tech giant when it comes to complete software solutions. With a flawless execution strategy, this company has derived superb...
Microsoft Stock Shows Promise, despite Valuation Concerns © Reuters. Microsoft Stock Shows Promise, despite Valuation Concerns

Microsoft (NASDAQ:MSFT) is perhaps the world's leading tech giant when it comes to complete software solutions.

With a flawless execution strategy, this company has derived superb long-term performance for shareholders. This performance has actually improved during the pandemic, providing another boost to this hyper-growth stock.

The company's share price has hit what many believe to be peak prices. Yet, many investors continue to pile into MSFT stock, despite its ballooning valuation. (See Microsoft stock charts on TipRanks)

This is now a company that's worth more than $2.2 trillion, an absolutely incredible sum of money, and the second-highest valuation in stock market history.

Many would argue that Microsoft's valuation is warranted. The company's underlying suite of products and services is impressive. Investors looking for growth have a reliable long-term champion in this regard with Microsoft.

Others remain uneasy. Perhaps the recent market-driven rally has been too much for value investors. Over the past week, we saw more selling than we have in quite some time. Accordingly, maybe now is the time to take some profits off the table.

I'm still bullish on the stock, despite the potential for volatility on the horizon.

MSFT Stock Comes with Ambitious Growth Narrative

MSFT investors are buying into a company with strong business fundamentals, as well as a strong growth outlook for the long-term. In fact, there are a number of investors who think Microsoft's growth narrative is one of the best in the market right now.

Now, Microsoft's time in the market may be a reason investors overlook this growth champion. After all, a company that's been around since the previous tech bubble can't have any more innovative lead left in its pencil, right?

Not so fast. Microsoft's increasing focus on its cloud technology and other growth segments is impressive. This is a company with a world-class management team that has done well to spur growth in recent years. Expectations are that Microsoft could grow its revenue by nearly 12% for some time. That's impressive, especially for a company of Microsoft's size.

Additionally, Wall Street estimates imply earnings per share will double to nearly $16 in the coming five years. Microsoft does have an impressive track record in this regard, thanks to its generous buyback program, and growth-oriented business model.

Of course, the past two quarters have been impressive for MSFT stock due to Microsoft's strong top- and bottom-line results. The company posted bottom-line gains of 44% year-over-year this past quarter, with revenue growing by 19%. As demand continues to increase for Microsoft's core product suite, and the work-from-home trend comes into play once again with the Delta variant of COVID-19, anything's possible for this growth stock.

In particular, 39% growth in the company's cloud bookings is notable. If Microsoft can grow this high-margin business rapidly, there's no doubt this valuation makes sense right now.

Or does it?

The Valuations Are Not Wrong

Despite the above positive catalysts, some investors are simply too bearish to go near any high-growth stock today. That sentiment sure seems to make sense, given the elevated valuation of the overall market right now.

However, there are reasons for these higher valuations right now. Interest rates remain near historic lows, and are likely to for some time. Investors seeking a reasonable return on their capital have few places to put it.

Given the momentum in growth stocks, it's hard to ignore the wealth-creating impacts of long-term gems like Microsoft.

What Are Analysts Saying about MSFT Stock?

As per TipRanks' analyst rating consensus, MSFT stock is a Strong Buy. Out of 22 analyst ratings, there are 22 Buy recommendations.

The average MSFT price target is $332.33. MSFT’s price target lies between a low of $275 per share, and a high of $411 per share.

Bottom Line

Microsoft is in a position to benefit from strong secular trends for a long time.

This company's focus on innovation, and technological superiority in its core segments, are likely to drive continued long-term growth.

Accordingly, investors looking for a mega-cap champion have a great option in MSFT stock.

Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

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21-09-2021 05:57:07 (UTC+7)

EUR/USD

1.1729

+0.0003 (+0.03%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (7)

EUR/USD

1.1729

+0.0003 (+0.03%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (7)

GBP/USD

1.3664

+0.0006 (+0.05%)

Summary

Neutral

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (2)

Sell (4)

USD/JPY

109.43

+0.04 (+0.03%)

Summary

Neutral

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (2)

Sell (4)

AUD/USD

0.7259

+0.0009 (+0.12%)

Summary

Neutral

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (1)

Sell (6)

USD/CAD

1.2814

-0.0011 (-0.09%)

Summary

↑ Buy

Moving Avg:

Buy (9)

Sell (3)

Indicators:

Buy (7)

Sell (1)

EUR/JPY

128.34

+0.08 (+0.06%)

Summary

Neutral

Moving Avg:

Buy (9)

Sell (3)

Indicators:

Buy (0)

Sell (8)

EUR/CHF

1.0885

+0.0009 (+0.08%)

Summary

Neutral

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (2)

Sell (4)

Gold Futures

1,764.85

+0.05 (+0.00%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (1)

Sell (7)

Silver Futures

22.267

+0.020 (+0.09%)

Summary

Sell

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (0)

Sell (7)

Copper Futures

4.1333

+0.0083 (+0.20%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (4)

Sell (3)

Crude Oil WTI Futures

70.48

+0.14 (+0.20%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (0)

Sell (8)

Brent Oil Futures

74.24

+0.18 (+0.24%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (8)

Sell (1)

Natural Gas Futures

4.934

-0.023 (-0.46%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (7)

US Coffee C Futures

182.30

-4.10 (-2.20%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (8)

Euro Stoxx 50

4,043.63

-87.21 (-2.11%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (1)

Sell (8)

S&P 500

4,357.73

-75.26 (-1.70%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (9)

Sell (1)

DAX

15,132.06

-358.11 (-2.31%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (3)

Sell (2)

FTSE 100

6,903.91

-59.73 (-0.86%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (2)

Sell (3)

Hang Seng

24,099.14

-821.62 (-3.30%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (0)

US Small Cap 2000

2,178.78

-58.09 (-2.60%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (6)

Sell (1)

IBEX 35

8,655.40

-105.50 (-1.20%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (0)

Sell (9)

BASF SE NA O.N.

61.660

-1.425 (-2.26%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (8)

Sell (0)

Bayer AG NA

45.23

+0.16 (+0.36%)

Summary

↑ Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (0)

Sell (10)

Allianz SE VNA O.N.

183.86

-6.37 (-3.35%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (5)

Sell (4)

Adidas AG

280.52

-1.08 (-0.38%)

Summary

Neutral

Moving Avg:

Buy (9)

Sell (3)

Indicators:

Buy (2)

Sell (6)

Deutsche Lufthansa AG

8.664

+0.454 (+5.53%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (5)

Sell (3)

Siemens AG Class N

142.26

-6.50 (-4.37%)

Summary

Sell

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (1)

Sell (5)

Deutsche Bank AG

10.230

-0.850 (-7.67%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (2)

Sell (5)

 EUR/USD1.1729↑ Sell
 GBP/USD1.3664Neutral
 USD/JPY109.43Neutral
 AUD/USD0.7259Neutral
 USD/CAD1.2814↑ Buy
 EUR/JPY128.34Neutral
 EUR/CHF1.0885Neutral
 Gold1,764.85↑ Sell
 Silver22.267Sell
 Copper4.1333↑ Buy
 Crude Oil WTI70.48↑ Sell
 Brent Oil74.24↑ Buy
 Natural Gas4.934↑ Sell
 US Coffee C182.30↑ Sell
 Euro Stoxx 504,043.63↑ Sell
 S&P 5004,357.73↑ Buy
 DAX15,132.06↑ Buy
 FTSE 1006,903.91Neutral
 Hang Seng24,099.14↑ Buy
 Small Cap 20002,178.78↑ Buy
 IBEX 358,655.40↑ Sell
 BASF61.660↑ Buy
 Bayer45.23↑ Sell
 Allianz183.86↑ Buy
 Adidas280.52Neutral
 Lufthansa8.664Neutral
 Siemens AG142.26Sell
 Deutsche Bank AG10.230↑ Sell
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank5,650/ 5,700
(0/ 0) # 856
SJC HCM5,615/ 5,680
(0/ 0) # 836
SJC Hanoi5,615/ 5,682
(0/ 0) # 838
SJC Danang5,615/ 5,682
(0/ 0) # 838
SJC Nhatrang5,615/ 5,682
(0/ 0) # 838
SJC Cantho5,615/ 5,682
(0/ 0) # 838
Cập nhật 21-09-2021 05:57:09
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ↀ Giá vàng thế giới
$1,764.11+9.910.56%
Live 24 hour Gold Chart
ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-IV2149021910
RON 95-II,III2139021810
E5 RON 92-II2014020540
DO 0.05S1602016340
DO 0,001S-V1637016690
Dầu hỏa1508015380
ↂ Giá dầu thô thế giới
WTI$70.49+0.560.80%
Brent$74.14+0.560.75%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.645,0022.875,00
EUR25.997,5927.350,60
GBP30.426,3531.697,56
JPY202,06213,76
KRW16,5320,13
Cập nhật lúc 18:51:42 20/09/2021
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