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Topic: Growth Stocks

MICROSOFT CORP. $28 – Nasdaq symbol MSFT

MICROSOFT CORP. $28 (Nasdaq symbol MSFT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 8.4 billion; Market cap: $235.2 billion; Priceto- sales ratio: 3.3; Dividend yield: 3.3%; TSINetwork Rating: Above Average; www.microsoft.com) has more than doubled its revenue and earnings in the past decade, thanks to steady demand for its Windows operating system and its Office suite of business programs. It has also increased its dividend from $0.08 a share in 2003 to $0.92 in 2012.

Even so, the stock has made little progress during this time. That’s partly because more people are using mobile devices instead of computers running Microsoft software.

The company hopes to take advantage of rising demand for mobile access with its new Windows 8 operating system, which will work with smartphones and tablet computers as well as traditional computers.

In addition, Microsoft will soon launch its new Surface tablet computer. The Surface’s ability to run Office programs should appeal to business customers.

Microsoft can easily afford to keep developing new products like these. It holds cash of $66.6 billion, or $7.91 a share, while its long-term debt is just $9.7 billion. The stock also trades at a low 9.6 times its likely fiscal 2013 earnings of $2.93 a share.

Microsoft is a buy.

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