Microsoft Corporation (NASDAQ:MSFT) is a compelling investment opportunity. Some question whether or not Microsoft Corporation (NASDAQ:MSFT) can sustain growth in the post-PC era. But I believe that the negativity surrounding computers is overblown and that international demand for Windows PC licenses will eventually stabilize. IDC estimates that from 2014 onward, global desktop and laptop shipments will resume growth at a 1.9% rate.
Microsoft Corporation (NASDAQ:MSFT) has been able to grow revenue from its servers and tools division by 11.2%, which is driven by the adoption of cloud and virtualization technologies. Microsoft Corporation (NASDAQ:MSFT) also saw substantial growth in its entertainment and devices division, which grew by 56.4%. Growth in its entertainment division was sustained through successful additions in XBox live subscribers paired with demand for video games and XBox 360 console devices. This growth is likely to be sustained with the addition of the XBox one.
Going forward, analysts on a consensus basis anticipate this company to grow earnings by 8.7% on average over the next five years. The company compensates investors adequately with a 2.6% dividend yield. Microsoft Corporation (NASDAQ:MSFT) remains a compelling investment for those who want a mix of growth and income in the technology space.
The Coca-Cola Company (NYSE:KO) is a bottling company. The stock comes with the added advantage of being non-cyclical. The company’s mantra of opening happiness is working on a global scale. It hopes to sustain its earnings-per-share growth through a mix of share buybacks, international expansion, and increases in territorial bottling within the United States. The company can also raise the prices on its The Coca-Cola Company (NYSE:KO) products consistently as food products are fairly inelastic (not price sensitive).
Analysts on a consensus basis anticipate this company to grow earnings by 8.9% on average over the next five years. The company trades at a bit of premium with a 21.4 earnings multiple, but it offsets the disadvantages of that high earnings multiple by operating in a non-cyclical sector of the economy. The company compensates its investors with a 2.8% dividend yield. It provides a great mix of stability, growth, and income, which should keep defensive investors happy for many years.
Conclusion
Ignore the market hysteria. Every time stocks have pulled back, there’s always a group of people who peddle the idea that stocks ought to crash in some sort of super-cycle pullback. This has failed to materialize in any of the stock corrections over the past five years.
Owning stocks is the safest bet for capital preservation, growth, and income. Position yourself wisely with these three Dow stocks and you shall profit handsomely in the years ahead.
The article Ignore the Bears and Buy These 3 Companies originally appeared on Fool.com and is written by Alexander Cho.
Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Procter & Gamble. The Motley Fool owns shares of Microsoft. Alexander 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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