You won’t buy them on a P/E of 11

I’m reminding myself to be ready to buy great franchises at valuation multiples that you seldom see.

Microsoft may be one of those.

If the price trades down to the $216 mark, the price action makes me comfortable that the stock has noticeably mean reverted to its 200 week moving average and has traded to 2.5 standard deviations below its weekly mean and registered a weekly oversold reading.

At $216, MSFT would be trading on a forward P/E ratio of 18.

One doesn’t see MSFT trade at 18 times earnings too often.

October 11, 2022

by Rob Zdravevski

rob@karriasset.com.au