Rebound Stock Buy Alert – Microsoft

RoboStreet – December 27, 2018

Taking a Position is the Market’s Most Coveted Company

The Market’s Most Coveted Company is Taking Position

The S&P 500 rallied 5% on Wednesday from what many believed to be extremely oversold conditions on a short-term basis. Rebounding oil prices, strong holiday sales, strong insider buying, and some short covering helped drive the S&P 500 to its best one-day gain since March 2009. Reports of Santa’s sleigh being weighed down got things going yesterday.

Amazon announced a record-breaking holiday season, and MasterCard’s SpendingPulse report noted that holiday sales from November 1 through December 24 showed the strongest year-over-year growth rate since 2011, resulting in a new record for dollars spent. For traders, the key event was the S&P 500 finding support at its 5-year moving average that sits at 2,350 that was successfully tested.

The worst December in history for the stock market has taken a terrible toll on every market leading stock – however I believe a bottom is in as evidenced by insider buying surging to an 8-year high, a true vote of confidence from those that know best about the current state of business conditions. Pull backs should be used for establishing new positions in only the very best blue-chip stocks where sales and earnings are being revised higher – not an easy feat in this market.

One of those stocks to consider to buy on dips is Microsoft (MSFT). The stock was the ‘last man standing’ in the tech sector when it closed its 200-day moving average on December 20. Having spent only five days under this key technical level is important as any rebound for the market could have the stock right back up above this trendline and heading higher into earnings season.

The company is a war chest of incredible franchises that include Windows operating systems, Office 365, Skype, Outlook.com, LinkedIn, Azure Cloud, MSN, Bing, Surface PC products and Xbox. Microsoft is winning large government cloud contracts andgaining fast on Amazon as the global leader in cloud computing.

With a market cap of $752 billion, Microsoft carries the highest valuation of any company in the world and is quite possibly the most valued high-tech holding by institutional fund managers. In the third quarter, Mr. Softie reported earnings of $1.14 per share versus estimates of $0.96 on a year-over-year 18.5% revenue gain.

By comparison, top-line growth for Q1 2018 was 11.9%, Q2 2018 was 15.5%, Q3 2018 was 17.5%. This is a rare time for investors to buy into Microsoft’s long and stellar history where a company this size is seeing accelerating top-line growth. When a company is hitting on all cylinders to the extentMicrosoft is, market turbulence offers an opportunity to buy the stock at a steep discount to recent price action.

I want to express my thanks to all readers of this column and to those that have joinedRoboInvestor in our first year of service. While the past three months have been historically negative, the underlying fundamentals for the market are constructive to recover and move ahead in 2020 – albeit with a higher dosage of volatility for sure.

Great stocks recoup their losses because their businesses are strong and the strong do not only survive – they thrive when the selling dries up. Set a new resolution for the year ahead and join me as a RoboInvestor where AI is your best friend and in your investing toolbox,promising to make you a smarter and wealthier investor.

Oh, and one last thing.

Buy Microsoft (MSFT) and have a Happy New Year.