Part 6

Microsoft Inc. (MSFT)

Company Background & Recent Financial Performance

Our next stock-pick from the SPY for the month is Microsoft Inc. (MSFT). The company has been delivering great financial results in the past 5 years, growing its sales and profits, beating analysts’ expectations and thus boosting investors’ profits. Microsoft’s has got a very strong market positioning in the sector it operates, currently boosted also by its robust Commercial business and its cloud-computing service Azure and its expanding customer base. Moreover, the company keeps on expanding its user base of Office 365 and Dynamics and their results, which are also very encouraging. The company’s subscriber base has been improving its competitive edge in the enterprise communication market against Slack and Zoom. Going back to early this year when the coronavirus came around, Microsoft’s officials were a bit worried the global economic slowdown could lead to a massive reduction in their revenues and profits and the company might fail to reach analysts’ expectations for the 1st and 2nd quarter of this year. Yet, the company didn’t only meet analysts’ expectations but also managed to report better than expected and surprised the market.

Therefore, following the strong market positioning and financial performance of the company, the stock has been among the top performing ones over the past 7 months since the sell-off came to its end back in March. In other words, MSFT had gone up from the $132 lows in March to the $232 highs in the beginning of September, followed by a bit of a profit-taking interest that has sent the price towards the key support mark at $200 where lots of buying pressure has taken place and investors and traders have already pushed it towards the current levels at $220. The company is announcing its 3rd quarter earnings on the 28th of October and the expectations are for $1.53 per share while it reported $1.38 in the same quarter of last year. Any figure better than the estimated would further boost the stock and we would take advantage of it in order to maximize our profits to the upside.

Chart: Microsoft Inc.

We will start buying MSFT stock aggressively at the first key support at $216-$218. Should the price drop further we would be interested in adding more to our long positions at the next strong support at $200-$205 where a lot more buying interest is expected. Our first take profit target will be set at $235, followed by the next target at $245-$250 where we would be fully cashing in profits and waiting for the next great buying opportunity on the stock.

JP Morgan Chase & Co (JPM)

Our next stock-pick for October would be JPMorgan Chase & Co. (JPM).

Company Background & Financial Performance

Headquartered in New York City, JPMorgan Chase is the largest bank in the United States by assets and the 7th largest bank in the world. Moreover, it is the world’s most valuable bank by market capitalization.
By looking at the 3rd quarter earnings report that came out on the 13th of October, we should say the company beat analysts’ expectations again and reported $2.92 per share while the expectations were for $2.68. In fact, that has been extremely important for the Bank’s overall financial performance and has proven to the market that it has managed to perform well even during the economic slowdown caused by the coronavirus pandemic. In fact, the stock is only trading at $100 at the moment, which is quite far from the $140 highs it had reached back in February before the pandemic. In other words, the stock has a lot further room for growth from the current levels and is currently trading at just above a key support level, giving further bullish indications.

Chart: JPMorgan Chase & Co.

We will start buying JPM stock at the current support level at $98-$100. In case the stock drops further we would be looking forward to buying again at the next key support at $92, which would give us a chance to get a better average price on the stock maximize our profitability to the upside. Our first take-profit target is set at $106, followed by the longer-term target at $115-$120 where we would be fully closing our positions and cashing profits.


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