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Consider Waiting for Pullback in Microsoft


Remember, Apple turned in a nice quarter and its stock hasn't taken off.

The weekend is upon us, and once again yours truly cannot wait.

Asian stocks got thumped overnight. The Hang Seng and the Nikkei were off 1.15% and 2.08%, respectively. However, European stocks were in positive territory early this morning. And here in the US, we're currently trading higher.

Here's what I'm focused on this fine but cold Friday morning:

Microsoft (MSFT):
Good ol' Mister Softee delivers.

Give its second-quarter release a look. It beat on the bottom line (even excluding some deferred revenue) and put up a solid overall sales number that's bound to have people talking this morning.

Some additional thoughts:

1. The beat was certainly nice to see, and I think the company deserves props. As of this writing, it appears as if the shares will open higher. We'll see, but I think they deserve to.

2. Don't get me wrong, I love Microsoft and think the stock could have plenty of upside potential in the next couple of years and beyond. But I'd rather wait for a pullback because I think we'll get one. Remember that Apple turned in a pretty nice quarter and its stock hasn't exactly taken off. To be honest, I'm a bit cautious on tech right now.

3. At $25 to $27, I'd be a tad more interested.

Procter & Gamble (PG):
Lots of eyes were on Apple (AAPL) and of course the market sell-off. But Procter needs some serious cuddling up to as well.

Give its second-quarter release a quick look. I think the big news was its outlook. It's looking to toss $4.02 to $4.12 a share on the scoreboard for the year. Frankly, I think management is playing it conservative, and that if anything, the actual bottom line will come in somewhere in the upper end of that range.

Some other thoughts:

1. While a lot of folks are tuned in to tech and other sectors, I'm liking the so-called boring companies. I think there's lots of promise in stocks like P&G, Kimberly-Clark (KMB), Clorox (CLX), and similar organizations. I see solid earnings prospects ahead of each of these names.

2. P&G's dividend and dividend history are hard to overlook.

3. Note the goose it got in Friday's session despite the lousy market. That's a decent sign, and I see potential for the shares to have some additional legs in the near-term as well.

Walmart (WMT):
Justin Sharon points out that Goldman goosed its rating on the stock to Buy.

My take:

1. I don't care what anyone says about this being the time to move out of discount and belly up to higher-end retailers, because Walmart is the place to be. I expect the shares to get a bump up on the heels of this news and to rise with the overall market at the open. That GDP number is bound to raise a few eyebrows.

The company has beaten estimates for the last two quarters and I think it will shuffle past expectations again in the fourth quarter.

Take-Two (TTWO):
Justin Sharon points out that the company was bumped up to Buy at Morgan Joseph.

In December I suggested that Icahn's bellying up could end up being a nice positive (see Why Icahn's Stake in Take-Two Is Score for Company), and my opinion hasn't changed. In fact, if anything, I'm even more intrigued by reports that he's gobbling up more shares. Stay tuned folks -- this could get interesting.

Have a great day and an even better weekend!
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No positions in stocks mentioned.

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