Being one of the “Magnificent Seven” stocks and a component of the Dow Jones, Microsoft (MSFT) is currently out of buy range after an early buy trigger. However, it is also approaching a potential new entry amid a nine-day win streak.
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Microsoft is part of the flagship IBD 50 list of leading growth stocks. It’s also part of the IBD Long Term Leaders list, reflecting the reliable earnings growth that makes it a good candidate for buying on a pullback.
On Oct. 24, the company surpassed Wall Street’s targets for its fiscal first quarter due to a strong cloud-computing business, and also raised its outlook for the current quarter, causing shares to rally more than 3% in response.
Microsoft earned $2.99 a share on sales of $56.5 billion in the quarter ended Sept. 30, exceeding analysts’ expectations. Year-over-year, Microsoft’s earnings increased 27% while sales climbed 13%.
With accelerating earnings growth over the past three quarters, from 10% to 21% to the latest reported 27%, MSFT stock shows strong potential.
Boasting a strong IBD Composite Rating of 97 out of 99, according to IBD Stock Checkup, Microsoft has shown powerful gains since January 2023 and strong fundamentals.
Dow Jones Leaders: MSFT Stock Eyes Latest Buy Point
On Nov. 1, Microsoft shares broke out past a double bottom’s 340.86 buy point. Another chart interpretation shows MSFT forming a cup base with a 366.78 buy point, according to IBD MarketSmith chart analysis.
The stock rallied 0.7% Wednesday, closing at 363.20, and possesses a number of strong metrics in its base, including a strong up/down volume ratio and an RS line at new highs.
An up/down volume ratio greater than 1.0 signifies institutional accumulation over the past 50 trading sessions. Additionally, a robust RS line indicates big stock market outperformance against the S&P 500.
For MSFT stock, an RS line at new highs is an especially powerful indicator to watch during the early stages of a new uptrend.
Be sure to follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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