As of right now, the price to acquire 1/628 millionth ownership position in Diageo stock costs $115 each. Because of the one-off items that the company has undertaken to cut costs, there is a discrepancy between reported profits over the past twelve months and the actual long-term normal profit base going forward that is indicative of the alcoholic company’s true earnings power. It’s a great way to scoop up blue-chip stocks at a discount or at least a fair price because a lot of people out there don’t have the time or patience to study the company and realize that the numbers spit out by stock screeners don’t tell you the truth about the company.
With the price of Apple stock having increased from $78 per share to almost $128 per share in the last year (for a gain of 64% in share price along, plus you would have to include the four dividends), it is easy to understand why Microsoft has gotten much less attention. In fact, it is almost impossible to discuss Microsoft stock in its own right without the relatively superior performance of Apple coming up in conversation. I’m not going to do that today because everyone knows Apple’s growth has been superior. Instead, I’ll tell you what I see when I study Microsoft: a company that mints cash.