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Killexams : Microsoft Fundamentals exam Questions - BingNews https://killexams.com/pass4sure/exam-detail/MB-920 Search results Killexams : Microsoft Fundamentals exam Questions - BingNews https://killexams.com/pass4sure/exam-detail/MB-920 https://killexams.com/exam_list/Microsoft Killexams : The Two Sides of Microsoft: Strong Fundamentals vs. Insiders' Selling Activity

First published on Simply Wall St News

Summary:

  • MSFT has superior fundamentals, including a 36.7% profit margin, estimated earnings growth of 11% p.a.

  • Analysts and our valuation model suggest that the company has 43% and 37% upside, respectively.

  • Insider selling activity warrants a more cautious approach when analyzing the company, as there are likely things insiders understand better about the business.

Microsoft (NASDAQ:MSFT) lost 19.4% of its market cap despite exhibiting some strong fundamental qualities. The company seems to be growing the top line, as well as scaling margins. We analyzed the company to see if the decline is warranted for the $1.7t market cap stock and came up with some mixed results.

Check out our latest analysis for Microsoft

Evaluating The Fundamentals

If we look at our company report, we find a number of quality markers that are rare in other companies. Here is a rundown of Microsoft's key fundamental benefits:

Trading at 37.3% Below Our Estimate of Its Fair Value

Using a discounted cash flow valuation model, we estimate that the company's intrinsic value is worth $2.7t. It seems that the price of risk has been pressuring the stock in the past year. However, the free cash flows are expected to grow to between $125b and $150b in the next decade, which could potentially make the stock attractive again once market risk settles down.

Earnings Grew by 18.7% YoY, and are Forecasted to Grow 11.33% Annually

Microsoft has a solid track-record of earnings growth in the past. The company has successful projects internally with the cloud growth, as well as executing well on growth by acquisitions such as the LinkedIn back in 2016.

The chart below illustrates the successful growth story for Microsoft:

msft-growh

The company has also managed to scale the net profit margin from 28.3% in 2019 to 36.7% in the last 12 months. Producing higher profits while growing revenue is a hallmark sign of value creation.

Trading at Good Value vs. the Peer Average Price-To-Earnings Ratio

Microsoft's peers are trading at an average price to earnings ratio of 19.7x, while the company is currently trading at a 23.9x PE. As earnings are expected to grow 11.3% in the next 12 months, this brings the forward PE to 23x. A PE above 17.4x implies a premium on the 5-year market average, but may be justified given the size and stability of Microsoft.

Analysts in Good Agreement for a 43.3% Upside

The average 1-year price target for Microsoft is $333.8 per share, and the 42 analysts covering the company seem to be in good agreement, with less than a 15% spread between estimates. The chart below shows that analysts are still bullish on the stock's performance:

msft-price-targets

In summary, we can see that Microsoft's fundamentals have a wide margin and are expected to keep growing in the future. Analysts are also in agreement that the stock price has been underperforming, which is in-line with our valuation estimates.

However, there are some things that the fundamentals can't tell us, and we can use other sources to double-check our assumptions.

A Wedge in the Story

In general, we want to see congruence between a company's fundamentals and the trading activity of people who know the stock inside-out. The assumption is that these insiders know more about the future of a business than analysts who have limited access to information.

When insiders are selling or buying stock in their company, it is always a good signal to pay attention to. We always expect a certain amount of insider activity, but ideally we would like that activity to be random, and disconnected with the movement of the stock. However, when we have an insider such as the CEO Satya Nadella, top ticking $285m worth of shares, at an average of $349 per share, we start wondering if this is a result of his judgement on the business potential. To be clear, the selling decision may have also been made for other reasons such as the anticipation of a worsened macro environment, which evidently happened after 2021.

Looking at the big picture, we see that Microsoft insiders sold more than they bought over the last year.

You can see the insider transactions (by companies and individuals) over the last year, depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume

If this dampens your interest, you can check out the other side of the spectrum with this free list of growing companies that insiders are buying.

The last three months saw significant insider selling at Microsoft. In total, insiders dumped $21m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Conclusion

While the fundamentals remain strong for Microsoft, it seems that the macro environment may be keeping both investors and insiders on the sidelines for the stock. When analyzing a stock like Microsoft, we want to see consistency between the fundamentals, investors' expectations on risk and the behavior of top management.

If you preferred to check out other companies, then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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Mon, 03 Oct 2022 02:18:00 -0500 en-US text/html https://www.aol.com/news/two-sides-microsoft-strong-fundamentals-133216200.html
Killexams : How Sen. Cantwell found bipartisan support for the historic CHIPS Act U.S. Sen. Maria Cantwell, a former Seattle tech executive first elected to the U.S. Senate in 2000, at the GeekWire Summit on Oct. 7, 2022. (GeekWire Photo / Dan DeLong) © Provided by Geekwire U.S. Sen. Maria Cantwell, a former Seattle tech executive first elected to the U.S. Senate in 2000, at the GeekWire Summit on Oct. 7, 2022. (GeekWire Photo / Dan DeLong)

If there’s one thing U.S. senators can likely agree on, it’s that there’s little that they agree about. So how did Washington’s Sen. Maria Cantwell recently manage to secure bipartisan support for passage of the $280 billion CHIPS and Science Act?

The Democratic lawmaker and others used a multi-pronged strategy that included educating colleagues about the security risk that the U.S. faced by losing its ability to develop and manufacture high-tech products. The approach worked, managing to outmaneuver opposition by Republican leader Sen. Mitch McConnell. Senate Majority Leader Chuck Schumer called Cantwell “relentless year in, year out” in working for passage of the legislation.

The bill includes incentives for reinvigorating semiconductor manufacturing in the U.S. and invests in R&D for AI, robotics, clean energy, nuclear power, quantum and other areas.

RELATED: Sen. Maria Cantwell says CHIPS Act is ‘unleashing’ response from private sector

It still had numerous critics, including a prominent member of Cantwell’s own party. U.S. Sen. Bernie Sanders called it a “blank check” for the semiconductor industry and voted against it.

I interviewed Cantwell at the 2022 GeekWire Summit about the journey to building support for the legislation, which passed with bipartisan votes in the House and Senate. Here’s what she said.

Highlighting the security threat

While the U.S. invented semiconductors, the country only produces 12% of the chips worldwide despite the fact that they’re pervasive in our lives.

Now Taiwan is a leader in chip production, and China is spending billions to build its own capacity. The accurate global chip shortage hampered production of essential goods including American cars. If growing political tensions were to cut off supply from Asian chip makers, it could impact the production of countless products, experts warn.

So Cantwell helped organize classified briefings for senators that were led by military heads, agency directors, and chief technology officers within various agencies. At meetings held in secure information rooms dubbed “SCIFs,” lawmakers could ask specific questions about security risks created by the lack of U.S. chip production.

After the meetings, “people were ready to go,” Cantwell said. “They were like, ‘Let’s get this bill done. Let’s get this over the goal line.'”

U.S. Sen. Maria Cantwell (left) and GeekWire reporter Lisa Stiffler at the 2022 GeekWire Summit. (GeekWire Photo / Kevin Lisota) © Provided by Geekwire U.S. Sen. Maria Cantwell (left) and GeekWire reporter Lisa Stiffler at the 2022 GeekWire Summit. (GeekWire Photo / Kevin Lisota)

Sharing concerns about global competition

Lawmakers in 2021 passed initial legislation to boost American chip production. That earlier bill, Cantwell said, woke up the rest of the world to U.S. plans to grow its semiconductor production. Europe began taking steps that could have drawn manufacturing to its shores instead.

The potential economic impacts troubled lawmakers from across the aisle. They needed to approve the CHIPS Act to unlock funding for the semiconductor work.

“We’ve passed this [2021] bill, and you’re going to now let this investment go to Europe, instead? You’re going to be buying chips in euros. Let’s not do that,” Cantwell said. “And that became a compelling message to the Republicans.”

Threatened loss of Midwest manufacturing jobs

Intel, the U.S. chip manufacturing heavyweight, announced plans in January 2022 to build a new facility in Ohio. But when the CHIPS and Science Act and the financial support that it included became uncertain, the company canceled a July groundbreaking.

“They said, ‘Well, I’m putting this on hold until this legislation passed.’ And that also was a wake up call. Because listen, we haven’t seen a lot of big manufacturing announcements in the Midwest,” Cantwell said.

Following passage of the bill, Intel broke ground on the Ohio facility in September.

Connecting dots from R&D to implementation and jobs

The U.S. in accurate decades has shown less interest in big investments in basic science. The CHIPS Act dramatically increases funding for the National Science Foundation (NSF), the Department of Energy (DOE) and national labs. It creates the role of tech directorate at NSF, who will help turn scientific discoveries into commercialized technologies.

“This was literally saying we want to dust off our R&D skills at universities, at NSF, at DOE, and keep our eye on how to help manufacturers translate the science faster into application,” Cantwell said. “Why? Because we’re facing competition from people around the globe who are doing the same thing.”

Lawmakers still need to unlock the money for the basic science research through end-of-the-year government funding legislation.

In some ways, Cantwell said, the CHIPS Act became a test for American lawmakers to demonstrate that they could still come together over important issues.

“[W]e were being watched around the globe. Could we pull this off? Could the institution of Congress that seems so divided, so partisan, dwelling on misinformation — could you really come together and do something as successful as passing this legislation?” she asked. “And the answer, the answer was yes.”

The bill passed the Senate 64-33 with 17 Republicans — including McConnell — voting in favor. The House approved the measure 243-187.

Mon, 17 Oct 2022 02:00:00 -0500 en-US text/html https://www.msn.com/en-us/news/politics/how-sen-cantwell-found-bipartisan-support-for-the-historic-chips-act/ar-AA133nlZ
Killexams : Cracking the Coding Interviews at Top techs: A Success Story

Summary

“Even if the company does not require a cover letter, I think it’s good to at least practice writing it”

“The first 2-3 rounds are the most difficult. Once you clear one company, it’s highly likely that you will have the foundation to clear all”

Mastering and cracking programmer interviews is never easy, particularly when preparing for an interview with top tech giants such as Apple, Facebook, Monster Lab, Bloomberg and Microsoft. The entire process of preparation can turn out to be a daunting experience. The key to crack such interviews is, however, careful planning and thoughtful preparation.

To make the process easier for you, our expert Meghalee Goswami shares her experience as to how she managed to crack her interview as a software engineer at Apple and at other top tech giants.

About Meghalee: Meghalee Goswami has been working as a software engineer at Apple for the past 5 years. At present she is engaged in developing products for Apple’s Content Delivery Network Team. After completing her Master’s in Computer Science and Communication Engineering from Waseda University, Tokyo she managed to get shortlisted for job interviews at Apple, Facebook, Monster Lab and Bloomberg. Belonging to a middle class Indian family, banking on her family’s finances was never an option for her to study in Japan and hence with her careful planning and strong networking skills, she managed to bag a scholarship from the Japanese government, allowing her to complete her entire education free of cost.

1. How did you manage to get shortlisted as a candidate at Apple? Can students apply to Apple outside of campus placements? If yes, then how?

As you can imagine, these kinds of companies get thousands of applications for a single position. The first step is to stand out from the rest and make sure your application is seen. This can be done in a couple of ways. One is an obviously known fact, the resume. I usually keep my resumes one page long, not cramping the space too much. After all, a resume is just to show a glimpse of your previous experiences and education, not to know everything about you. I personally prefer a very basic minimalist style.

The other part is a cover letter. Even if the company does not require a cover letter, I think it’s good to at least practice writing it. This will provide you dedicated time to a) research the company and b) figure out why you want to apply for that position. This will also help you answer some questions during the interviews later on.

The other important but often overlooked thing is to know people within the organisation. I don’t hesitate to send messages to strangers or recruiters on LinkedIn if their work or career interests me. Please be careful to not come across as a spammer. Most people only care to reply to genuine texts backed by research. During my time in Tokyo, I networked a lot, went to a lot of career forums, and recruitment events, made a list of all the companies I was interested in applying to, and tried to figure out a way I could connect with people inside the organisations. I also made sure I have the recruiters added to my network.

In one such event at my university, I chanced upon a recruiter from Apple. I told her I was really interested in doing an internship. She told me she will get back to me if anything opens up. And a few months later, I got an email from her asking me if I was interested in applying for a position.

2. You worked as an Intern at Apple for quite a few months. What were the areas you touched upon as an intern and on the basis of which qualities were you selected to work as a full-timer?

I was the first intern that was hired in my team and the bar was really high. I worked with extremely smart people from all over the world which meant a lot of growth but also imposter syndrome. I worked on technologies I did not know before. I think the most important thing to succeed was the ability to not know something but figure it out without giving up. Apart from the technical challenges, I gave presentations to the top-level management. I recorded myself for hours before each talk to make sure I sounded okay. Eventually, the project I worked on during the internship received a lot of recognition and was appreciated by everyone. And then, they extended me a full-time offer.

Thereafter, the first step was to clear all the interviews. I had 7 rounds of interviews. I needed to be technically prepared. So I practiced coding algorithms from books like How to Crack the Coding Interview and practiced problems from websites like Leetcode. I also revised System Design, Databases.

3. How did you manage to get a scholarship from the Japanese government?

I wanted to go abroad for studies, and banking on finances from my family was never an option. The only way around this was to get a scholarship to study abroad that would cover my living expenses too. I narrowed down my priorities 1) get a scholarship; 2) go somewhere with comparatively cheaper living costs and choose a course that allows me to work part-time. I researched all kinds of scholarships. WeMakeScholars helped me narrow down scholarships. There’s a lot of content around this nowadays on Youtube, too. But everybody’s situation is unique and so are the challenges. There were a lot of deadlines and I remember having a huge calendar where I marked all the scholarship deadlines and worked accordingly. Each scholarship was unique and had separate requirements so I had to tailor what I was doing accordingly. Courses in Japan are research based and I don’t think I paid any money to apply to the colleges, unlike other countries where you have to spend money to apply to colleges. I needed a good research proposal that would be liked by a professor and therefore accepted into a university. Without the professor’s consent, the research won’t be accepted. I made a list of all universities that were doing areas in research I was interested in.

I studied how to write a research proposal, consulted with anyone I found doing research in the area, and eventually wrote a research proposal on how I want to use game theory and AI algorithms to solve gaps in areas of low connectivity. I collected the email IDs of professors from university websites and emailed them individually. Some replied with rejection, some did not reply and a few of them were interested in my research proposal and wanted to have a chat with me. I explained I wanted to come to Japan and do this research. I also was very honest and clear about my financial situation. I asked for help. Eventually, my professor recommended me for scholarships. Recommendations work a lot in Japan. That’s how I could get scholarships and even a research assistantship position.

4. How did you manage to get such a high-paying part-time job in Japan?

Although I got scholarships, it was not enough to live comfortably in Japan. I needed part-time jobs to sustain myself. Honestly, I was getting rejected from places like cafes or restaurants because back then I did not speak any Japanese. I applied to many jobs but the only places I could get accepted to were places that teach English or STEM subjects in English or as Programming Instructors. I realised I could make a lot of money by teaching kids how to code. The skill is very special in Japan or anywhere now and parents want their kids to know how to code. I got an interview call from a start-up in Tokyo that specialises in STEM and Coding Education, also SAT and ACT test prep. During the interview, I was asked to provide a mock SAT & ACT test in Math, Physics, Chemistry, Programming, and English. I failed Chemistry but I passed Math, Physics, and Programming. I started teaching middle school, high school, and university students how to code, Math, and test prep. And I got paid 5 times the average salary in Japan per hour.

5. You cracked Monster lab’s interview as well? What was the entire process like? And how can a young student prepare for the same?

I think all coding interviews have a standard process. The first 2-3 rounds are the most difficult. Once you clear one company, it’s highly likely that you will have the foundation to clear all. Since I had prepared hard before the Apple Interview, all I needed to do is to keep practicing algorithms and brushing up on my fundamental Computer Science concepts. Apart from the website and book mentioned before, I also studied Orielly Core Java, Data Structures, and Algorithms. I also recommend practicing coding on a notepad or platforms like CoderPad. If you use an IDE often you’ll have a dependency on it for syntax corrections. Practicing one programming language was also important for me. I have coded in a lot of languages but I only stick to Java during my interviews even if my job demands knowledge of another programming language. I state my preference for the language and usually, they comply. It’s important to be comfortable in such nerve-wracking situations.

6. You even managed to get through a few rounds of interviews at Bloomberg and Facebook till you withdrew your applications midway as you wanted to join Apple. What was the entire interviewing process like there?

For these, I followed the same strategy. During the Facebook interview, I had a few initial calls with the recruiters where they asked me about my research work, and previous experiences. In the next round I had a talk with the hiring manager for the team. He asked me extensively about the algorithms that I used during my research work, what could I have done better in the algorithm, and questions like if you go to the browser, and type facebook.com, what sort of API calls provide back the request. After this round I was asked to do a coding round, I prepared from the websites and books I mentioned above. By this time, I had received an offer from Apple and I really wanted to join Apple. So I just informed them that I’ll be taking another offer.

For Bloomberg, there were two major areas that they were recruiting for and I was interested in them. I set up some initial calls with the recruiters and asked for the details about what the team does so that I could prepare more for those skills. The first interview for Tech companies is usually always a call with the recruiters discussing your experience and if they think you're eligible they forward you to the next steps that are usually done with the team that you are applying for. For example, Bloomberg deals with a lot of fast transactions of data, so they would definitely be interested in someone who can performance-tune their code. So I focussed on writing more efficient and performant code during the interviews.

Most candidates are terrified of entering the daunting process of technical interviews. The main reason being the large number of applications these companies get for their vacant positions, leading to intense competition and difficult interview processes. Mastering a technical interview at a big tech company may seem nearly impossible, but as our expert Meghalee Goswami confirms, with thoughtful and systematic preparation, you can end up landing your dream job.

Last updated on 17 Oct 2022

Thu, 13 Oct 2022 15:54:00 -0500 text/html https://www.telegraphindia.com/edugraph/career/cracking-the-coding-interviews-at-top-techs-a-success-story/cid/1891960
Killexams : Fundamentals of cyber security - AQA test questions - AQA No result found, try new keyword!Which piece of software is not malware? A form of software testing used to simulate an external hacking attempt A form of software testing used to simulate an internal hacking attempt A form of ... Sat, 25 Jul 2020 16:11:00 -0500 en-GB text/html https://www.bbc.co.uk/bitesize/guides/znnny4j/test Killexams : The fundamental questions the USMNT must answer before the World Cup
Which version of Weston McKennie will show up?
Can Christian Pulisic be an attacker anymore?
Are Yunus Musah and Antonee Robinson irreplaceable?
Can Tyler Adams make the plays a single pivot needs to make?
Where is Aaron Long on the depth chart?
What happened to the press?
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Is Matt Turner the No. 1?
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So, now what?
National Writer: Charles Boehm

Apple and Major League Soccer to present all MLS matches around the world for 10 years, beginning in 2023

Tue, 27 Sep 2022 10:51:00 -0500 en text/html https://www.mlssoccer.com/news/the-fundamental-questions-the-usmnt-must-answer-before-the-world-cup
Killexams : Apple Vs. Microsoft Vs. Treasury Bonds: The Battle Of Safe Havens Round-3
Padlock on hundred dollar bill

Aslan Alphan

Introduction

Since my last update on the "Battle of Safe Havens" on 25th August 2022, Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Treasury bonds have experienced a swift decline in price due to rapidly rising interest rates and a worsening macroeconomic environment.

Here's our past coverage of this intriguing battle:

Apple Microsoft performance

YCharts

Treasury rates

YCharts

In my previous note, I highlighted how slowing revenue growth and contracting margins at BigTech companies were making their valuations untenable in a rising interest rate environment. With the risk-free treasury rate (of 3.5-4%) higher than the free cash flow yield offered by so-called safe haven stocks like Apple and Microsoft, there is a lack of equity risk premium. This is a breach of the immutable laws of money.

With the 10-yr treasury at 4%, one could argue that high-quality businesses like Apple and Microsoft deserve a Price-to-Earnings multiple of ~20-25x (equity risk premium of 0-1%). And by this logic, Apple and Microsoft seem fairly valued right now.

Apple vs Microsoft Earning multiples

YCharts

However, evidence suggests that the 'E' (earning) could be about to contract in upcoming quarters. Last Friday, Advanced Micro Devices (AMD) pre-announced its Q3 results, and it was an absolute shocker for investors. AMD is gaining share in the PC market, and still, its PC revenues (distributed across Client and Gaming business lines) are down significantly in Q3. Now, some customers might be waiting for AMD's upcoming Zen4 devices, but the slowdown in PC markets is pronounced.

AMD Q3 Preliminary Results

AMD Investor Relations

As you may know, Apple and Microsoft have significant exposure to PC markets, and the pull forward from COVID could result in a sizeable hit to their topline in upcoming quarters. Before AMD, Micron (MU) and Nike (NKE) announced decent quarterly numbers, but an inventory problem is set to hurt margins in Q4 for both companies. With the Fed hellbent on fighting inflation, the threat of recession looms large. An earnings recession is coming, and even the likes of Apple and Microsoft are not immune to the broader economy. If (more like when) earnings estimates for Q4 and 2023 are revised lower, we will see another leg down in BigTech stocks (and, by extension, broader equity markets).

Despite significant valuation moderation, the near to medium-term risk/reward for Apple and Microsoft is still unfavorable for investors. Here are TQI's fair value estimates and projected returns for Apple and Microsoft:

Stock Price TQI Fair Value Estimate Next 5-yr CAGR Return (%)
Apple $140 $105.98 13.26%
Microsoft $234 $156.27 10.34%

Now, many DGI investors would happily accept double-digit CAGR returns, and if you are such an investor, buying Apple and Microsoft here is fine. At TQI, our investment hurdle rate is 15%, and since we are not getting that (just yet), I am still 'Neutral' on Apple and Microsoft.

What Do The Charts Tell Us?

Since Fed's hawkish pivot in Nov-21, broad market indices have entered a correction. In a rising interest rate environment, high-flying tech stocks have come under immense selling pressure. The Nasdaq-100 index [tracked by QQQ ETF (QQQ)] is re-testing June lows, and a breakdown of these lows could result in a decline to the pre-COVID range of $215-235 (for QQQ).

Nasdaq-100 index Moving Average

WeBull Desktop

Microsoft is a significant component of broad market indices like the QQQ and SPY, which means its price action tends to be similar to what we see in the broad market. Unfortunately, Microsoft has already broken below its June lows and is now looking nailed on to test the pre-COVID level of $210. My fair value estimate for Microsoft is only $156, and so, I am unlikely to turn into a buyer at $210, either. For now, Microsoft's stock is firmly entrenched in a downward falling wedge pattern, and I won't rule out a decline to the mid-100s. And that's where I would like to buy more MSFT shares.

MSFT moving average

WeBull Desktop

Apple is a bellwether stock, and while most tech stocks are falling in downward wedge patterns, Apple's stock chart is looking like a descending broadening wedge, which is a bullish continuation pattern.

AAPL moving average

WeBull Desktop

Technically, Apple is experiencing a correction, and it will likely move higher in the long term. However, in the near term, Apple looks set to re-test its June lows of $130, and if it breaks this key level, Apple could be headed down to its fair value of ~$105 (which is also the 200DMA level).

Considering the medium-term risk/reward [25-40% downside risk vs. 10-13% CAGR returns] for Apple and Microsoft, I rate both of them 'Neutral or Avoid or Hold' at current levels.

Bonds Are Now Looking Attractive

In order to fight persistently-high inflation, central banks across the globe have adopted quantitative tightening programs, which include interest rate hikes and liquidity withdrawal through balance sheet roll-off. The risk-free treasury rates in the US are now in the 3.5-4% range, and if the Fed sticks to its rate hike path, we could be headed even higher in 2023. After more than a decade, bonds are a real alternative to equities.

In the past, treasury yields have risen beyond the CPI inflation rate during periods of high inflation; however, this ongoing rate hike cycle may be close to peaking out as concerns around financial stability are growing and assets are deflating across the board.

Holding cash is not ideal if you plan to deploy this cash at a certain time in the future. And so parking it in highly-liquid, risk-free assets is a smart move. For those looking to invest in bonds, I want to share a Cash or Treasury management strategy.

A bond ladder is a collection of bonds with different maturities. Such an investment strategy is devised to get assured periodic cash flows. For example, we can invest in ten US treasury notes/bonds with a term length of 1, 2, 3, ... 10 years. Every year one bond matures, and that cash flow can be used as per need. For our investing operations at TQI, we are using T-bills such that one matures each month. In the case of our GARP portfolio, we had $45K (~43% of AUM) in cash that we planned to deploy over the next nine months. Here, we bought T-bills of $5K each with maturity/term lengths of 1 to 9 months. So, instead of $5K, we will have a somewhat greater amount to invest at the time of our planned bi-weekly capital deployments.

Building a bond ladder is simple, but if you have any questions, please share them in the comments section below.

Final Thoughts

We concluded our last update on "The Battle of Safe Havens" in the following manner:

According to the definition, a bear market ends with a 20% bounce off of lows, and we got this in accurate weeks. Hence, by definition, the bear market is over, and a new bull market has started. However, I think it is still too early to call a bottom. A tighter monetary policy could lead to a growth slowdown and cause a recession. Despite the growing clamor for a Fed pivot, I still think inflation is too high, and the Fed will need to keep going for some time to come. The markets may go up with rates (as this has happened in the past), but these tightening cycles often lead to something breaking in the economy and eventually a crash in the stock market. Will this time be any different? I don't know.

I don't know where the market is headed next; nobody else knows either. The macro-environment remains challenging, and the Fed's QT [quantitative tightening] program is just getting started. With Apple and Microsoft trading at lofty valuations despite an evident slowdown in revenue growth and significant moderation in operating margins, I think the near to medium-term risk/reward from current levels is unfavorable for bulls. Yes, there are tons of opportunities in beaten-down growth stocks, but if the large caps get hit (in an earnings recession), the smaller cap stocks will likely continue to remain under pressure. Hence, I plan to stick with The Quantamental Investor's playbook for a bear market environment -

"Build long positions slowly using DCA plans, and manage risk proactively."

Source: Apple Vs. Microsoft Vs. Treasury Bonds: The Battle Of Safe Havens Round-2

How Are We Investing In These Uncertain Markets At The Quantamental Investor?

As we have seen in the "Battle of Safe Havens" series, traditional safe-haven stocks like Apple and Microsoft are not so safe for the near to medium term.

As of today, the entire June-August rally has been reversed, and it is fair to say this move was just another bear market rally. I have no idea where the market is headed next. So far, in this bear market, the selling has been very much measured. We haven't seen capitulation. Will the market (SPX) crash to $3,000 by year-end? I don't know. What I learned from Micron and Nike's results is that corporate earnings will come under severe pressure in upcoming quarters. Honestly, I think earnings will drive markets going forward because the multiple contraction is more or less complete (except for a few large-cap tech names like Apple, Microsoft, and Tesla (TSLA)). The top 10 S&P 500 companies are trading at 21-22x+ PE, whereas the remaining 490 are already at 13-14x PE.

Author's investment mandates

The Quantamental Investor

This is a very tricky market, but there are tons of incredible opportunities for individual stock investing. In all three of TQI's core portfolios [GARP, Buyback-Dividend, and Moonshot Growth], we are ready with cash (roughly 50% of AUM) if the opportunities improve. Our playbook for this bear market is simple - "Build long positions slowly using DCA plans, and manage risk proactively."

In the "Battle of Safe Havens", cash has been the winner so far; however, surging treasury rates are making treasury bonds a viable alternative to equities. If I had to choose between Apple, Microsoft, and the 2-yr treasury bond, I would go with the 2-yr treasury bond for the medium term.

Key Takeaway: I rate both Apple and Microsoft 'Neutral/Avoid/Hold' at current levels.

Thanks for reading, and happy investing. Please share your thoughts, questions, and/or concerns in the comments section below.

Mon, 10 Oct 2022 01:30:00 -0500 en text/html https://seekingalpha.com/article/4545593-apple-microsoft-treasury-bonds-safe-havens
Killexams : The Two Sides of Microsoft: Strong Fundamentals vs. Insiders' Selling Activity

First published on Simply Wall St News

Summary:

  • MSFT has superior fundamentals, including a 36.7% profit margin, estimated earnings growth of 11% p.a.

  • Analysts and our valuation model suggest that the company has 43% and 37% upside, respectively.

  • Insider selling activity warrants a more cautious approach when analyzing the company, as there are likely things insiders understand better about the business.

Microsoft (NASDAQ:MSFT) lost 19.4% of its market cap despite exhibiting some strong fundamental qualities. The company seems to be growing the top line, as well as scaling margins. We analyzed the company to see if the decline is warranted for the $1.7t market cap stock and came up with some mixed results.

Check out our latest analysis for Microsoft

Evaluating The Fundamentals

If we look at our company report, we find a number of quality markers that are rare in other companies. Here is a rundown of Microsoft's key fundamental benefits:

Trading at 37.3% Below Our Estimate of Its Fair Value

Using a discounted cash flow valuation model, we estimate that the company's intrinsic value is worth $2.7t. It seems that the price of risk has been pressuring the stock in the past year. However, the free cash flows are expected to grow to between $125b and $150b in the next decade, which could potentially make the stock attractive again once market risk settles down.

Earnings Grew by 18.7% YoY, and are Forecasted to Grow 11.33% Annually

Microsoft has a solid track-record of earnings growth in the past. The company has successful projects internally with the cloud growth, as well as executing well on growth by acquisitions such as the LinkedIn back in 2016.

The chart below illustrates the successful growth story for Microsoft:

msft-growh

The company has also managed to scale the net profit margin from 28.3% in 2019 to 36.7% in the last 12 months. Producing higher profits while growing revenue is a hallmark sign of value creation.

Trading at Good Value vs. the Peer Average Price-To-Earnings Ratio

Microsoft's peers are trading at an average price to earnings ratio of 19.7x, while the company is currently trading at a 23.9x PE. As earnings are expected to grow 11.3% in the next 12 months, this brings the forward PE to 23x. A PE above 17.4x implies a premium on the 5-year market average, but may be justified given the size and stability of Microsoft.

Analysts in Good Agreement for a 43.3% Upside

The average 1-year price target for Microsoft is $333.8 per share, and the 42 analysts covering the company seem to be in good agreement, with less than a 15% spread between estimates. The chart below shows that analysts are still bullish on the stock's performance:

msft-price-targets

In summary, we can see that Microsoft's fundamentals have a wide margin and are expected to keep growing in the future. Analysts are also in agreement that the stock price has been underperforming, which is in-line with our valuation estimates.

However, there are some things that the fundamentals can't tell us, and we can use other sources to double-check our assumptions.

A Wedge in the Story

In general, we want to see congruence between a company's fundamentals and the trading activity of people who know the stock inside-out. The assumption is that these insiders know more about the future of a business than analysts who have limited access to information.

When insiders are selling or buying stock in their company, it is always a good signal to pay attention to. We always expect a certain amount of insider activity, but ideally we would like that activity to be random, and disconnected with the movement of the stock. However, when we have an insider such as the CEO Satya Nadella, top ticking $285m worth of shares, at an average of $349 per share, we start wondering if this is a result of his judgement on the business potential. To be clear, the selling decision may have also been made for other reasons such as the anticipation of a worsened macro environment, which evidently happened after 2021.

Looking at the big picture, we see that Microsoft insiders sold more than they bought over the last year.

You can see the insider transactions (by companies and individuals) over the last year, depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume

If this dampens your interest, you can check out the other side of the spectrum with this free list of growing companies that insiders are buying.

The last three months saw significant insider selling at Microsoft. In total, insiders dumped $21m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Conclusion

While the fundamentals remain strong for Microsoft, it seems that the macro environment may be keeping both investors and insiders on the sidelines for the stock. When analyzing a stock like Microsoft, we want to see consistency between the fundamentals, investors' expectations on risk and the behavior of top management.

If you preferred to check out other companies, then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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Mon, 03 Oct 2022 02:18:00 -0500 en-GB text/html https://uk.finance.yahoo.com/news/two-sides-microsoft-strong-fundamentals-133216200.html
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