Big Money Dumping Microsoft Could Benefit Long-Term Investors

MSFT is a household name in technology. It develops and supports software, services, devices, and solutions for businesses and individuals around the world. Its cloud and AI businesses could produce another several years of success after decades of growth.

But like many other stocks, MSFT has gone through a bad period of forced selling recently. Each red bar in the chart below signals unusually large volumes in MSFT shares. They reflect our proprietary Big Money outflow signal, pushing the stock lower:

It’s no wonder MSFT shares are down 10% this year. MAPsignals data shows how Big Money investors are shedding this quality name.

Time to Buy Microsoft?

When best-of-breed stocks are sold hard, history shows it’s often a buying opportunity for long-term investors. Institutional volumes reveal plenty. Each red bar below signals unusually large outflow volumes in MSFT shares:

Look at the stretch in 2022 – red bars for nearly a year. Capitulation was in full effect and share values fell. But those who bought during that time have profited handsomely since, even with the latest dips.

See, despite the near-term volatility, there’s a powerful fundamental story happening with Microsoft.

Microsoft Fundamental Analysis

A healthy fundamental backdrop makes this company worth investigating. As you can see, MSFT has had strong sales and earnings growth, as well as healthy profits:

• 3-year sales growth rate (+13.5%)
• 3-year EPS growth rate (+13.9%)
• Profit margin (+36%)

Source: FactSet

Also, EPS is estimated to ramp higher this year by +13.4%.

MSFT has a track record of strong financial performance.

Marrying great fundamentals with our proprietary software has found some big winning stocks over the long term.

Microsoft has been a top-rated stock at MAPsignals. That means the stock has unusual buy pressure and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

It’s made the rare Top 20 report multiple times in the last decade. The blue bars below show when MSFT was a top pick…sending shares upward:

Look at all those Top 20 signals and look how much share values have grown. Even those who bought before the 2022 decline have gained. And those brave enough to buy when the stock was down, like in 2022, were rewarded even more.

Tracking unusual volumes reveals the power of money flows.

This is a trait that most outlier stocks exhibit…the best of the best. Big Money demand drives stocks upward.

Microsoft Price Prediction

Given the fundamentals, it wouldn’t surprise to see the stock rise once again with Big Money support. Great companies don’t stay down forever.

Big Money selling in the shares is signaling to take notice. Given the historical gains, strong fundamentals, and recent big selling, this stock could be worth a spot in a diversified portfolio.

Disclosure: the author holds long positions in MSFT in personal and managed accounts at the time of publication.

If you are a Registered Investment Advisor (RIA) or are a serious investor, take your investing to the next level, learn more about the MAPsignals process here.