After a more difficult start to the year, things are now back and my overall picks are back in the black. Today I’m back with my 4th pick, I’ll try to pick up the pace a bit. Apple has been a very big help in getting things back thanks to its record breaking earnings that took the stock to its all-time high.

You can see my long & short trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers for today’s trade:

Here is a chart that I always like considering, especially for 2 stocks that are trading at very comparable P/E ratios, as you see Microsoft clearly has had superior growth in the past 2 years:

MSFT Revenue (Quarterly YoY Growth) data by YCharts

Long Microsoft (MSFT)

These days, Ben Thompson (Stratechery) has been critical in helping me get a better grasp of what Microsoft has been doing, what it should be doing, etc. Overall, I feel like they are doing much better than the market seems to be giving it credit for. I personally don’t consider the last earnings report anywhere near bad enough to justify that kind of drop and I do expect that to continue.

Next earnings release: April 23rd 2015

Short Adobe Systems Inc. (ADBE)

Both Adobe and Microsoft are facing a similar challenge as they attempt to change a software business from an “acquisition” customer base to a “subscription/ongoing” business. That started earlier at Adobe and for the most part has been a success but the growth remains fairly low and I don’t think expect that to change. The fact is that Adobe faces a very difficult environment and a lot of competition, which is also true for MSFT but that Nadella led company has a very strong presence in the still important (for enterprise especially) pc world. I don’t see anything that justifies Adobe having a higher forward P/E and feel very good about this new trade.

Next earnings release: March 17th 2015

Disclaimer: No positions on either MSFT or ADBE but I will initiate this trade on the open today