Investors continue to underestimate the growth opportunity both of these stocks present. You certainly do not buy them for the dividend, though it's nice. You buy them for their strong competitive positions and aggressive future plans.
My article history on TheStreet contains more than a few bullish discussions of Intel and Microsoft's potential. So much of it, of course, hinges on the success of ultrabooks and Windows 8 during the holiday shopping season as well as each company's push into the mobile space.Focusing on Microsoft, I find it funny that several media outlets made a big deal out of something the company included in the risk factors section of its most recent annual report ( via the SEC): "In addition, our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform." That amounts to boilerplate because really, unless Apple (AAPL) decides to open up its operating system, Microsoft has practically nothing to worry about. I guess Google (GOOG) could turn Android into a Windows 8 competitor in the PC market, just as Microsoft looks to make the latter a serious foe to the former in the mobile space. But that's not a transition that will take place overnight. As it stands, what is a Dell (DELL) or Hewlett Packard (HPQ) laptop, for example, worth without Windows, particularly Windows 8? Not much. To that end, I hope the Office for iPad rumors are just that; it makes no sense to deliver one of your prime competitive advantages -- a piece of software that ties so many to your platform - to Apple. It was a different ballgame when Microsoft did it on the desktop. This is mobile and Microsoft plays the role of underdog.
Canadian BanksIf there's ever going to be a crash, I expect a soft landing in the Canadian housing market. After incredible increases in price, Vancouver is down considerably. Canada's biggest city, Toronto (I will be there for a couple of days in early August), looks like it could move along a similar path. Actual number of sales in both places has tapered off. Major differences exist, however, between the Canadian and American housing markets. First, the banks have and continue to lend, relative to what we saw here in prior to the 2008 crash, responsibly. Canada also continues to tighten mortgage regulations in anticipation of weakness. Simply put, they're doing something we never did -- acting prudently to begin with and properly preparing for a soft landing in a housing market than really cannot continue to go up. My screen for stocks with attributes similar to RCI, BCE and TWX turned up five Canadian bank stocks:
I bailed from the iShares MSCI Canada Index ETF (EWC) earlier this year shortly after it started to tank. It might be time, however, to jump back in. It represents a straightforward way to get considerable exposure to Canadian banks. As of Friday's close, RY, TD and BNS make up EWC's top three holdings at 6.22, 6.02 and 4.79% of net assets, respectively. BMO is 7th at 3.14% and CM is 13th at 2.46%. And, being a Canadian ETF, you hedge your best with several strong utility and natural resource plays not to mention RCI and BCE with exposure right around 1% of net assets apiece. Follow @RoccoPendola At the time of publication, the author was long AEP, BCE, BDX, INTC, MSFT and RCI. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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