Buy Microsoft
Today, I used a down day in the market to buy 35 shares of Microsoft. I bought it for a price of $28.77.
MSFT is currently yielding approximately 1.5% in dividends and is trading at a PE of 19.
In 2006 MSFT’s earnings per share increased from $1.04 to $1.27 or 22%. In 2007 it increased from $1.27 to $1.49 or 17%. For 2008 its earnings are on track to increase to around $1.87 or by about 25% unless something goes awry.
An increase in earnings averaging around 20% is really good for a company of this size. If the 2008 EPS estimates are true and the PE stays around 19, this stock should be worth around $35 a year from now.
This is of course assuming that nothing strange happens. If our economy tanks, I do expect this stock to sink a little, but over the long run, I see no reason why Microsoft won’t continue to grow. Large exposure to international markets is also another reason to like this particular one.