Microsoft Feels Like Lead

Despite sentiment that Microsoft's stock is stuck, there are analysts making a bull case. Longhorn-related products should generate license sales of $50 billion over four or five years, says Jamie Friedman, who follows the company for Fulcrum Global Partners, an independent securities firm. Add in another $8 billion in deferred revenue and other items, the new operating system could generate $70 billion, estimates Friedman, who has a buy on the stock and a $30 price target. Fulcrum does not have an investment-banking relationship with Microsoft.

Even if Friedman is bullish, the risks are probably not that great. "With the multiple shrinking, some of the risk has been taken out. There's less downside than in the market as a whole," says Choice Funds' Adams. And the stock has a history of revving up in anticipation of an upgrade cycle.

Fair enough, and if you're looking for a defensive play, Microsoft is likely a good one. But there are a lot of stocks out there that are going to grow significantly faster over the next 12 months or so.