1. Microsoft (MSFT)
Down around 16% in the past 6 months, Microsoft is a Strong Buy right now because of its diverse revenue sources and growth potential. Their 1.3 PEG isn’t as attractive as other AI stocks right now but it’s their overall diversification and AI use case that gives it a better risk profile than a lot of pure-play AI stocks out there. What makes their AI use case so appealing is that they will be able to launch AI services across the majority of their already existing product lines.
MSFT stock has a great valuation at a 24 PE given its 5 year historical average is around 33. They also have an impressive dividend history even if it’s only at a 1% average yield. Microsoft has also beat all 4 of their last earnings calls and analysts have rated Microsoft a Strong Buy with an average one year forecast of +36%. We have put them as low risk, medium reward and have rated it a Strong Buy with a +17% one year forecast.
2. Amazon (AMZN)
Up 41% in the past year we still love Amazon and have it rated as a Strong Buy rating with a 14% one year upside. Amazon currently has a PEG ratio of 1.3 which is quite a bit lower than its 10 year historical average of around 2.48. Such a delta between the two indicates that AMZN stock is currently undervalued relative to its historical performance.
Amazon has beat their last 3 earnings calls and have a long history of being able to post strong earnings results. They are considered low risk thanks to their diverse revenue sources, having 5 major sources making up the bulk of their income (Online Stores – 38%, 3rd Party – 24%, AWS – 18%, Advertising – 10%, Subscription – 7%). The average analyst rating is a Strong Buy with a +10% upside.
So if you have $1000 to spend on stocks this month, you can’t go wrong with either company given their tried and true risk to reward profiles.
Topics: MSFT stock prediction, Amazon stock review, AMZN stock analysis
