Can Microsoft Corporation (MSFT) Afford a Surface Wound?

Worth a Second Look

That said, Apple Inc. (NASDAQ:AAPL) might be worth a second look. The company holds leading positions in the fastest growing industry segments. Its shares have fallen around 40% from their highs because investors are concerned about its growth prospects in mature markets. That’s a reasonable concern, since Apple sits at the high-end of the market, a model that doesn’t work well in relatively less affluent, but fast-growing emerging markets.

That means the company has to either find a new wealthy customer base or bring out new products that can continue to drive sales higher. Neither looks to be in the cards right now. However, Apple Inc. (NASDAQ:AAPL) trades with a PE of around 11 and yields about 2.8%. And it is working on new gear and opening new markets. Apple might be the better options since Microsoft Corporation (NASDAQ:MSFT) shares are more expensive and market expectations are high for Google Inc (NASDAQ:GOOG).

Changes Afoot

These three industry giants are increasingly starting to look like one another. Of the trio, Google Inc (NASDAQ:GOOG) is most expensive. Investors should be wary of the high expectations built into its valuation. Microsoft Corporation (NASDAQ:MSFT) is taking the right steps, but has much to prove—particularly if growth spending continues to constrain earnings. Apple Inc. (NASDAQ:AAPL), meanwhile, is fairly cheap today. With low expectations, its risk/reward profile is probably the most compelling.

The article Can Microsoft Afford a Surface Wound? originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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