Red Hat Inc (RHT), Microsoft Corporation (MSFT): Three Tech Stocks To Consider Buying

I therefore see greater opportunity with the the Surface Pro, which is expected to compete with laptops like Apple’s MacBook Air, which costs $999, and Ultrabooks, which have a price tag between $600 and $700. Microsoft Corporation (NASDAQ:MSFT) should leverage its reputation as a PC maker by emphasizing the Surface Pro as more of a comprehensive computer. The Surface Pro, after all, carries the same processor as the MacBook Air but is still much cheaper.

It is disconcerting, however, that Windows 8 has not sold as many copies as expected. Microsoft Corporation (NASDAQ:MSFT) was at one point even offering promotional prices of $40, as opposed to the traditional $200 price.

I encourage hedging Microsoft with an investment in Oracle Corporation (NASDAQ:ORCL). This software producer trades 20% cheaper on a P/E basis despite a forecast for 100 greater basis points in EPS growth over the next five years. In addition, its stock price has underperformed Microsoft’s by 3,360 basis points, year to date. This underperformance positions Oracle Corporation (NASDAQ:ORCL) to deliver strong returns when the company ends up growing faster than Microsoft to take investors by surprise.

Conclusion

Tech can often be uncertain. However, Microsoft Corporation (NASDAQ:MSFT) and Red Hat Inc (NYSE:RHT) have done a reasonably strong job in diversifying into higher-growth markets. I encourage investing in Red Hat for growth and Microsoft for value.

The article 3 Tech Stocks To Consider Buying originally appeared on Fool.com and is written by David Gould.

David Gould has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft and Oracle. David 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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