Feed: A Cheap Strategy To Play Microsoft - AggScore: 11.4

A Cheap Strategy To Play Microsoft

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pBill Gates is super rich but his once highflying software organization has been in the doldrums because mid2002 right after falling in the 35 degree. The problem with Microsoft MSFT continues to be its failure to grow both its revenues and earnings at the superlative rates the organization as soon as enjoyed.br br Any business the size of Microsoft, with a marketcap of 242 billion, will discover growth an concern due to the fact of its size. But this is not to say the stock is dead. Far from it, Microsoft remains a viable longterm computer software company and is money rich with 34 billion or 3.28 per share in cash. This gives the stock lots of financial flexibility to produce or purchase growth technologies. Microsoft just announced it would spend 1.1 billion in RampD at its MSN Internet unit within the FY07. And according towards the Wall Street Journal, Microsoft is exploring the possibility of getting a stake in Internet media company Yahoo YHOO to take on Internet advertising behemoth Google GOOGbr br But with an estimated fiveyear earnings growth rate of a pitiful 12, the company has its work cut out for it. Trading at 16.30x its estimated FY07 EPS of 1.44, the stock is not pricey but appears to become priced not being a growth stock.br br Its PEG about the surface of 1.51 isnt lowcost, but in case you discount within the money of 3.28 per share, the estimated PEG falls to close to 1,0, a decent valuation. Also, if Microsoft can improve on its estimated 12 growth rate, the PEG would decline further.br br The fact is Microsoft at the current price deserves a look. If you want to play the stock but do not want to shell out the 2,347 for any 100share block, you may want to take a take a look at the longterm options, also known as LEAPS. For instance, the inthemoney January 2008 22.50 Microsoft Call LEAPS not set to expire right up until January 18, 2008 presently costs 380 a contract 100 sharesbr br This means you risk a total of 380 for the chance to participate within the prospective upside of 100 shares of Microsoft over the next 20 months. The breakeven price is 26.30. If Microsoft breaks 26.30, you would begin to make money in your LEAPS. Conversely, if Microsoft fails to do anything, your maximum risk is 380 for the initial option play.br br Warning The aforementioned instance is for illustrative purposes only and not being construed as an actual option strategy. Due for the higher risk inherent in choices, I recommend you speak with an investment professional before deciding to employ any strategy involving alternatives.p pbr You can find more information about a hrefhttppennystockglobe.comdailystockquotesdaily stock quotesa, a hrefhttppennystockglobe.comdoublingstocksscamdoubling stocks scama, and a hrefhttppennystockglobe.compennystockboardpenny stock boardap