According to veteran investor Mark Hawtin, Microsoft offers the greatest potential reward for investors looking to invest in a stock over the next five to 10 years. Hawtin, investment director at Zurich-based GAM Investments, said the big tech company’s dominant position and critical role in the enterprise software ecosystem make it ideal for weathering a recession in the global economy. “It’s hands down our favorite mega-cap name,” he told CNBC’s Pro Talks Wednesday. “If you had to make an investment over a five to 10 year period, and you weren’t allowed to change your mind, then to me Microsoft would be the clearest risk-return player over that period among those big companies.” Hawtin oversees several global long-only and long/short funds at GAM, which has approximately $80 billion in assets under management. He invests in disruptive growth and technology stocks. MSFT 1Y Line In an extensive discussion with CNBC’s Joumanna Bercetche, Hawtin also indicated that Microsoft would buck the trend among its peers and report an increase in earnings this year. He is not alone in that opinion. FactSet data shows that analysts expect a 2% increase in earnings per share this year for S&P 500 companies overall, compared to Microsoft’s expected EPS increase of 8.5%. According to Hawtin, Microsoft will outperform the broader market because it has a diverse revenue stream. He said the company, headquartered in Redmond, Washington, will continue to see revenue growth as it is an integral part of many of its customers’ technology. For example, millions of companies around the world use Microsoft Windows, Office 365 and its cloud computing platform Azure as the backbone of their IT infrastructure. These systems either have no equivalent competitor or are difficult to replace immediately. “I think one of the most important things about understanding Microsoft is that they’re so ingrained and embedded in so many companies,” Hawtin said. This unique ability also means that it will benefit more profitably from advances in artificial intelligence than other companies focused exclusively on AI, Hawtin said. “In the same way as Teams as a video conferencing option compared to Zoom as a standalone company,” he added. Microsoft is bundling its workplace collaboration software Teams with Office 365, putting it ahead of rivals Zoom and Slack, which is owned by Salesforce. According to Hawtin, the company’s stock was also among the top 10 largest companies in the S&P 500 more often than any other company over a period of several decades. “There are many companies that have tried unsuccessfully to get rid of Microsoft,” he added.
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