Buy Microsoft Stock Before the Price Rises

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There is no better time than the present to buy Microsoft (NASDAQ:MSFT) Inventory. Down almost 25% on the year and currently trading at around $250 per share, MSFT stock is on sale and would be a worthy long-term addition to any portfolio.

Investors should keep in mind that, despite the recent downturn, Microsoft shares have gained 247% over the past five years and generated a return of more than 700% for shareholders over the past decade. With leading positions in key technology segments such as software, cloud computing and video games, Microsoft is the type of solid technology investment that can carry investors through the ebbs and flows of any market.

MSFT StocAntitrust probe

The latest in MSFT stock is news that England’s competition watchdog has opened an investigation into the company’s $68.7 billion acquisition of a video game maker. ActivisionBlizzard (NASDAQ:ATVI). The UK Competition and Markets Authority said its investigation “will consider whether the deal could harm competition and lead to worse outcomes for consumers”.

The regulator has set September 1 as the deadline for its initial decision on Microsoft’s proposed acquisition of Activision Blizzard. The UK regulator is one of the first watchdog organizations in the world to investigate the deal, which was announced in January this year.

While some industry analysts have questioned the impact of Microsoft’s purchase of Activision Blizzard on the $190 billion video game industry, the general view is that, despite any regulatory scrutiny, the the deal is expected to be finalized next year. This would give Microsoft control of popular video game franchises such as “Call of Duty” and “World of Warcraft.”

At least one top investor is betting that the deal will succeed. Warren Buffett’s holding company, Berkshire Hathaway (NYSE:BRK.ANYSE:BRK.B), purchased more than 74 million shares of ATVI stock with the intention of offering them at the agreed sale price of $95 per share once the acquisition is approved.

Attractive valuation

Aside from buying Activision Blizzard, there are plenty of other reasons why investors are bullish on MSFT stocks.

Among its mega-cap tech peers which include, Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Metaplatforms (NASDAQ:META) and the parent company of Google Alphabet (NASDAQ:GOOGNASDAQ:GOOGL), Microsoft has the best profit margins at 37.6%. Meta Platforms comes in second with a profit margin of 31.2%. While Microsoft shares trade at 27 times earnings this year, that valuation isn’t too high given the company expects revenue growth of 18.5% this year and 14% next year. , as well as 15% earnings growth this year and next.

Microsoft also has more than $100 billion in cash and several business units that are seeing double-digit year-over-year growth, including its Azure cloud computing and digital advertising units. This growth complements the continued strength of Microsoft’s flagship operating system, Windows, and associated Office software, which continues to dominate the personal computer market with nearly 74% of desktop computers worldwide running Microsoft products.

Increasingly, Microsoft is selling its Office software through a software-as-a-service (SaaS) model that requires customers to pay subscription fees to access software products from the cloud, providing the company with revenue recurring and predictable.

On top of everything else, Microsoft has been paying a quarterly dividend that it’s been steadily increasing every year for over a decade. The dividend yield for MSFT stock is currently 0.94%, which is good for a quarterly payout of 62 cents per share. Many Microsoft peers, including Amazon and Alphabet, do not pay dividends.

Among the 37 analysts covering MSFT shares, the median price target is $349.50, implying a 38% upside over the next 12 months.

Buy MSFT shares while you can

The rout for tech stocks this year has been severe, with the Nasdaq index down nearly 30% since January. Many tech stocks are down 70% or more. Although heartbreaking, the sale has dented the price of many top companies and provided investors with bargains if they can endure short-term pain for long-term gains. Microsoft is one such stock.

The company continues to be one of the largest and best-managed technology companies in the world, and its actions have a reputation for rewarding shareholders. As such, investors should add Microsoft to their portfolio as long as it remains cheap. MSFT stock is a solid buy.

As of the date of publication, Joel Baglole held long positions in MSFT, AAPL and GOOGL. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.