Buy a Slice of this $300 Tech Stock at Any Price
Shah Gilani|April 19, 2022
This company is one of my favorites.
It’s a mega cap company with a capitalization over $2 trillion. Its revenue on a trailing-twelve-month basis is $185 billion. Its profit margin is 38.5%… and it’s still growing. There is no reason not to own this stock.
Well, maybe there is. Not everyone can afford to spend $279 per share. If you’re on a budget, like many Americans are these days, that price tag can be a deal breaker – but it doesn’t have to be.
To learn how you too can own such an expensive stock for $100, $50, $25, or even less watch today’s video, or scroll down to read the transcript.
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Learn how to invest on a budget using fractional shares.
Shah’s weekly Take It to the Bank Tuesday recommendations are based on investing with fractional shares. If you’re new to this kind of investing, we encourage you to read Shah Gilani’s report on fractional shares.
Sincerely, the Total Wealth Editorial Team
04/19/2022 Take It to the Bank Tuesday Transcript
Hey, everybody Shah Gilani coming to you with your, Take It to the Bank Tuesday, where I recommend what you should do with $100 today. As in right now.
What have I got for you today? I got a giant. And a giant killer. I’m talking about Microsoft Corp (MSFT).
Microsoft, which I’ve always tack on to the FAANGs for years. When the FAANGs drove the market higher and higher and higher, it wasn’t just the FAANGs. It was the fangs and Microsoft. They were all the same to me. They were all lump together. They led the market. They were the stalwart leaders of this incredible historic bull run.
So, Microsoft happens to be one of my absolute favorite companies, but that’s not why I’m giving it to you as a recommendation to buy in. I’m giving it to you because it’s on sale right now. It’s 20% off of its highs.
Right now, Microsoft is trading around $279 and change, we’ll call it. The highs… $349 bucks not long ago. So it’s down $70, or 20% off of those highs. Anytime you can buy a crazy great company, like Microsoft, 20% off of its highs, you step up and you put your money down. You put your $100 down. It’s well spent money.
What do I love about Microsoft? Not just [the discount]. It’s a $2+ trillion market cap company.
The size is because investors keep paying up for the stock, bidding the stock higher. And that’s what gives it its huge market cap. It’s not cheap in a “price earnings multiple” respect. Between the trailing 12 months and the forward-looking PE, I’m gonna give it a blended about 27… With the PE around 27 with and the market 20, thereabouts, it’s more expensive than the market. But is it a value stock even though the PE looks high? The answer is yes.
Why is the PE high? Because investors (smart investors) have always been willing to pay up for Microsoft’s earnings. So, they pay up in price cuz they know the earnings are coming. And that’s smart.
I love it because the earnings are constantly on the come up. This is a $2+ trillion company that’s got trailing 12-month revenue of $185 billion. A profit margin on that? 38 and a half percent. On that giant? That’s tremendous. This is still a growth company. As far as I’m concerned. How are they growing? How about revenue? $185 billion trailing 12 months revenue, revenue growth, 20% quarter-over-quarter based on the last year.
Come on people. This is a steal. This is a company you want to own. Yes, they have debt. People tell me all the time about, “Oh, doesn’t Microsoft have a lot of debt?” Yeah. Microsoft got about $80 billion in debt, which they pay practically nothing on because I think their credit quality is probably better than the U.S. Government’s. So very tiny interest on the debt that they have used to the balance sheet, somewhat smart leverage on the balance sheet. They’re also sitting on $125 billion in cash. Could they pay the debt off? Of course, they could. Write a check! But that’s not smart. Having some leverage on the balance sheet is what the makes Microsoft smart.
So, it generates tremendous operating cash flow, tremendous lever, free cash flow on operating side, operating flow is $84 billion a year. On the leverage free cash flow… Call it $46 and a half billion a year. So it’s constantly generating cash. Then they don’t need to pay off the debt. They should probably borrow more before interest rates go higher and that would be the smart thing to do. And they’ve got plenty of cash to pay and they’re adding to their cash pot. So, you gotta love Microsoft for everything it does. The way it does is the way it manages bound all of its products.
The fact that it is a monster, a growth monster still. So today for your a hundred dollars, buy yourself a hundred bucks worth of Microsoft and take it to the bank. I’ll catch you next week.
Cheers,
Shah