Microsoft Corp. (Nasdaq: MSFT) is one of our favorite tech stocks to buy at Money Morning, and it just traded at an all-time high of $98.69 on May 14.
Robinson has been an investing expert for over three decades. He is a top tech journalist and analyst who has been ahead of just about every emerging technology story over the past 10 years.
He even has a Pulitzer Prize nomination.
And on Feb. 28, Robinson went on Chuck Jaffe’s “MoneyLife” podcast and provided listeners with three big reasons why he’s so bullish on MSFT stock, plus his strategy to protect your MSFT investment…
Why We Are Bullish on MSFT Stock Right Now
Microsoft’s involvement in cloud computing, legal cannabis, and cryptocurrencies will generate a lot of revenue, and more money can lead to a higher share price.
Microsoft’s Azure cloud offers storage, analytics, machine learning, and developer tools. In Q2 2018, the tech giant reported commercial cloud revenue climbed 56% year over year, to $5.3 billion.
Microsoft didn’t specify how much revenue Azure brought in, but MSFT said it had revenue growth of 98% over the last year.
Through the cloud business, Microsoft is also an early player in the legal marijuana industry.
In fact, it partnered with a startup called Kind in 2016.
Kind offers cannabis-tracking software that monitors seed-to-sale production for growers, sellers, and government agencies. This will help growers and sellers stay compliant with new laws, and it will also help keep marijuana off of the black market.
And with 30 states and the District of Columbia having some form of legalized marijuana, the need for this service is going to be huge.
Legal marijuana sales in North America totaled $10 billion in 2017, and that’s expected to skyrocket 145%, to $24.5 billion, by 2021.
Finally, Robinson loves Microsoft stock because it’s also a play on the $406 billion cryptocurrency market.
In August 2017, Microsoft launched the Confidential Consortium (“Coco”) Framework, which aims to turn the promise of Ethereum’s smart contracts into a disruptive reality.
Microsoft CTO Mark Russinovich said on Aug. 12, 2017, that the tech giant has started exploring how Coco could be used in the retail, supply chain, and financial services sectors.
Because of all these sources of revenue growth, analyst are joining Robinson in his bullish outlook for the MSFT stock price…
Over the next 12 months, FactSet reports one analyst expects the MSFT stock price to climb to $130 per share.
From [Monday’s] (May 14) closing price of $98.03, that’s a potential gain of 32.61%.
That profit opportunity doesn’t even include Microsoft’s $1.68 dividend, which is a yield of 1.72%.
Of course, no matter how good things look for MSFT shareholders, Microsoft stock is not immune to market volatility.
The Dow Jones Industrial Average dropped nearly 5.5% from Feb. 27 to March 2, and the MSFT stock fell right along with it during that same time.
It dropped from $95.74 to $91.58, a 4.34% loss in less than a week.
However, Robinson always has a plan to minimize losses and maximize gains.
Robinson says his strategy is “perfect to use when market volatility is high.”
When used correctly, it will protect you from volatile markets.
But that’s not all…
It could also maximize your returns.
Here’s how it works, so you know how to capitalize on the double-digit gains Microsoft stock could make its shareholders in the next 12 months…
Use This Strategy to Maximize Your Profits from MSFT Stock
Robinson calls his strategy the “Cowboy Split.”
Here’s how it works…
First, decide how much money you want to invest in MSFT stock.
You’ll use half of the money to buy MSFT at the market price, which would be $98.03 today.
Once the market order fills, you’ll enter a lowball limit order with the other half of the money at 20% less than the market price, which would be $78.43 per share.
If MSFT falls to $78.43, the order will automatically fill.
Between your first order and your second order, you now have an average purchase price of $88.23.
If Microsoft climbed to $90 per share after falling to $77, you would be in the green, with a 2% return.
If you just bought in at $98.03, you would be down 8.19%.
Source: Money Morning