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Mr. Softee - just too big to ignore

|Includes: Microsoft Corporation (MSFT)
Microsoft (NASDAQ:MSFT) has made a lot of people a lot of money but can new investors make money owning it in the future?

Microsoft develops, manufactures, licenses, and supports a wide range of software products for a multitude of computing devices. Microsoft software includes scalable operating systems for servers, personal computers, and intelligent devices; server applications for client/server environments; knowledge worker productivity applications; and software development tools. The Company's online efforts include the MSN network of Internet products and services and alliances with companies involved with broadband access and various forms of digital interactivity.

There is no doubt that two of the biggest selling software products in the world will continue to be Windows 7 and Office 2010.  MSFT continues to spend in R&D so you can always expect new products in the future.

At the present time the stock is on the move and Barchart rates it a 100% short term buy.  The stock trades above its 20, 50 and 100 day moving averages and presently trades around 25.54 which is above its 50 day moving average of 24.56.  The stock moved up 2.38% last month and has a Relative Strength Index that is 67.33% and rising.

Wall Street brokerages are pumping this stock to their clients with 30 buy and 8 hold reports published.  They estimate sales will increase by 8.40% this year and 7.20% next year.  Earnings forecasts are double digit with an expected increase of 11.90% this year 11.10% next year and a 5 year compounded annual EPS growth rate of 10.72%.

If the following on Motley Fool is any indications this must be a core holding in every average investors' portfolio.  The CAPS members vote 12,341 to 1,903 that the stock will beat the market and the All Stars agree 2,927 to 189.  Fool notes that the recent articles about the company have been positive 49 to 1.

The stock has everything to like:
  • Very actively traded
  • Widely held and followed by both Wall Street and the average investor
  • Relative Strength Index above 75% and rising
  • 100% Barchart short term buy signal
  • Wall Street estimates sales and earnings will increase
Jim Van Meerten is an advisor to Marketocracy Capital Management who uses his model portfolios not only to manage their mutual funds but also their clients Separately Managed Accounts. You can read his blogs about those model portfolios and investing here and on Barchart Portfolio Blogs. Please leave a comment below or email

Disclosure: Jim Van Meerten through Marketocracy Capital Management has an interest in the stocks mentioned in this blog.