Microsoft Corporation (NASDAQ:MSFT) soaring with a market value north of $1 trillion
Among technology companies, Microsoft (NASDAQ:MSFT) is considered mature. Microsoft stock has a market value north of $1 trillion, it pays a dividend (a steadily rising one at that), and the company went public in 1978. So by nearly any stretch, Microsoft is indeed a mature company.
Yet even with those aforementioned traits, Microsoft stock has many of the hallmarks of a growth or momentum stock. Last week, the company said it earned $1.37 a share on revenue of $33.72 billion for its most recently completed fiscal quarter, easily topping Wall Street estimates of earnings of $1.21 per share on sales of $32.77 billion.
“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” Microsoft CEO Satya Nadella said in the earnings release.
Microsoft is also richly valued, a trait often reserved for younger growth companies. At nearly 27x forward earnings and 10.20x book value, Microsoft is pricier than Apple (NASDAQ:AAPL), a name often viewed as a growth stock. However, Microsoft stock deserves the lofty multiples. More importantly, the company delivers the earnings growth necessary to make those multiples seem not so frothy.
Some analysts overtly say Microsoft stock offers “growth at a reasonable price” and that the company’s ability to execute not only warrants its rich valuations, but could portend more upside for the shares.
At this writing, Microsoft has a market capitalization of $1.07 trillion, but some analysts think that number could jump to $1.3 trillion over the next year, indicating that 27x forward earnings is appropriate if not downright attractive.
Additionally, Microsoft stock isn’t just a cloud story. The company has multiple compelling, growing revenue streams. Microsoft Office is growing. LinkedIn revenue jumped 14% last quarter. Microsoft could easily become a play in artificial intelligence and it is already a dominant force in video games. Those are two fast-growing markets right there and ones that are not always appreciated as they pertain to Microsoft stock.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 145.66.
The projected lower bound is: 136.48.
The projected closing price is: 141.07.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with MICROSOFT CP), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 79.8560. This is not an overbought or oversold reading. The last signal was a sell 6 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 68.78. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 20 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 154.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
MICROSOFT CP closed up 1.430 at 140.720. Volume was 13% below average (neutral) and Bollinger Bands were 33% narrower than normal.
Open High Low Close Volume___
138.900 140.740 138.850 140.720 20,738,276
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 138.10 132.41 116.41
Volatility: 14 23 33
Volume: 24,450,800 23,415,912 30,685,394
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
MICROSOFT CP is currently 20.9% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of MSFT.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on MSFT.O and have had this outlook for the last 30 periods.