10 Good Reasons to Consider Microsoft for Your Portfolio

1. Microsoft (NASDAQ: MSFT) is the most widely held stock among the value oriented ’super investors’ tracked by dataroma.com: 24 out of 49 had it in their portfolio last time they disclosed their positions. It was also the most added stock during the first quarter of 2011 among the tracked investors.

2. The market values Microsoft to be worth 224,6 billion USD. This translates to forward P/E of just 9.6 and Price per free cash flow 11.6. For every share worth $26,63, Microsoft has $5.95 of cash. It gives great return on equity at 44.0% and is highly profitable (Profit Margin 31.8%). It is no wonder that value oriented investors are flocking to Microsoft.

3. Microsoft requires little capital investment. In an inflationary environment, it won’t have the problem of replacing assets at much higher prices. On the other hand, as it is low on debt (Debt/Equity 0.22), it won’t suffer from increasing real interest rates in a deflationary environment either.

4. It’s out of favor – even hated by many. Hot stocks in hot industries are carrying a hefty price premium that may vanish. Stocks that are out of favor are more attractive to value investors – especially when the company is making lots of money and has growing product segments to offset declining ones.

The 6 other reasons you can find from my article published exclusively by Seeking Alpha:

http://seekingalpha.com/article/279355-10-good-reasons-to-consider-microsoft-for-your-portfolio

Disclosure: I am long MSFT, NOK.