Was Microsoft a Value Trap in 2012?

[GrayHare]

"Is Microsoft a Value Trap?" That was a popular discussion after the stock had treaded water after the dot com crash. The article from 2012 linked below decides it's probably not and forsees annual growth of 3% to 8%. Instead, since then MSFT's growth rate as averaged more like 23% annually, with the stock price roughly doubling every 3 years since (16x). I enjoy looking back at pieces like this one. It helps me judge current stock opinions. Predictions are hard, especially about the future. https://seekingalpha.com/article/915791-is-microsoft-a-value-trap

 

[ownyourfuture]

Reminded me of this.

Here we see Steve Jobs & the almost bankrupt at the time Apple Computer making a temporary deal with Bill Gates & Microsoft. The crowd was not too happy about it.

 

[RobLJ]

Curiuosly, I bought 100 shares in Feb 2012 and MSFT did nothing for about 18 months, then started what at first looked like a slow rise, which accelerated rapidly (some would say irrationally) around 2020 and 2023. When shares tripled I sold half my original position, then just watched. Gain is 1340% as of today, according to Quicken. I liked their movement to yearly subscription and their early Cloud work, although the growth didn't really accelerate for a while (the cash flow, however, was doing very well).
I think it is overvalued now, but am playing with the house's money.

Novo-Nordisk, another holding that I've had for only 5 or 6 years is doing the same thing. I sold 1/3 of the position that more than covered the original investment plus another 50% profit and have been watching it fly to the moon. At some point I might sell another 1/3 since its valuation is also ..... stretched. Probably with a stop loss.

It's more fun to talk about winners than... losers!

 

[Running_Man]

https://www.early-retirement.org/forums/f44/microsofts-lost-decade-62113-3.html

And you can see here on this thread that very few people had any idea of the value of the company despite being a great company and growing over decades. As I pointed out then, Microsoft was a growth company through the entire run of price compression in the stock. The PE declined the yield increased but the company continued to make 40 cents on every sales dollar.
Was yielding 3% in 2012. Now paying in excess of 10% dividend on 2012 price annually and up 10X in price.

 

[copyright1997reloaded]

https://www.early-retirement.org/forums/f44/microsofts-lost-decade-62113-3.html

And you can see here on this thread that very few people had any idea of the value of the company despite being a great company and growing over decades. As I pointed out then, Microsoft was a growth company through the entire run of price compression in the stock. The PE declined the yield increased but the company continued to make 40 cents on every sales dollar.
Was yielding 3% in 2012. Now paying in excess of 10% dividend on 2012 price annually and up 10X in price.

Interesting. I didn't comment on that thread, but did buy a smallish holding in Mr. Softie (MSFT) in April 2010. I bought it because I though it represented value, its core cash flow products were still in place, and I didn't think they would follow the route of IBM. I've held it since and haven't sold any. Now my 2nd largest single stock holding (after Apple, see below).

Bought Apple (also mentioned here due to the deal with Microsoft to infuse cash when things were looking dire) in October 2000. Bought it because Jobs was back and they had $13 per share in cash (with a $18 stock price). Unfortunately I have sold some of it, but still my largest single stock holding. (Yes, it is HURTING my YTD performance.)