With the stock at $43.50, yielding 2.8% and trading with a forward P/E below 15, it’s hard to argue against Microsoft (NASDAQ: MSFT).

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Yes, I know Microsoft recently reported a 9% decrease in quarterly earnings. And that management lowered current quarter revenue guidance by $3 billion below what analysts were expecting. And that the stock fell to a three-month low after the report.

But this is all noise in an otherwise strong push by Microsoft to re-assert its dominance.

Remember that big ships turn slowly and Microsoft is a very big ship indeed. In the middle of the last decade, as the competition raised the bar, Microsoft didn’t do all that much. And despite a nice dividend, shares of Microsoft were not all that enticing.

But that’s changed. Microsoft is stepping up its game. The release of Office 365 likely represents the biggest strategic move by the company in years. Forget about the acquisition of Skype, the purchase of Nokia’s phone business, and even the introduction of the Xbox.

The future of Microsoft is exemplified by Office 365, and it appears to be working.

In the last quarter, commercial cloud revenue — driven by Office 365, Azure, and Dynamics CRM — rose by 114% year-over-year. The segment is now on pace for annual sales of $5.5 million. Triple-digit growth confirms that the company’s strong push into cloud computing is paying off.

For the average consumer it’s easiest to understand Microsoft’s push into the cloud by simply looking at Office 365, a cloud-based version of the company’s most popular applications.

The key innovation with Office 365 is that it is designed to work across all devices. That means it works with Apple iPads, iPhones and MacBooks, as well as devices that run Android. This is a huge deal because it finally allows virtually everyone out there to use Windows again.

Microsoft has priced Office 365 for perfection too. A single user license costs just $6.99 per month for one PC or Mac, one tablet and one phone (a household subscription for multiple devices costs $9.99 per month).

That pricing seems extremely reasonable, especially when one considers that Microsoft gets $179.99 for a traditional Microsoft Office license. The ability to pay monthly or annually, as well as use Office across all devices, is a clear win for consumers.

But it’s a win for Microsoft as well.

Microsoft’s typical Office license lasts about six years. That means the company gets around $30 per license in annual revenue ($2.50 per month). In other words, with Office 365 for a single user, Microsoft stands to make 2.8 times more money.

Now, clearly there is a lot more to Microsoft than just Office 365. The company generates nearly $100 billion in sales each year. But the product illustrates how the company is fully committed to recapture the massive user base that drifted away in the middle of the last decade, and growing long-term revenue at the same time.

The announcement that Microsoft won’t charge for users to upgrade from Windows 7 and 8 to Windows 10 is yet another sign of its commitment. And perhaps most importantly, it shows that the strategy we saw unfolding with Office 365 is part of a longer-term strategic advance.

Microsoft is trying hard – very hard – to make it possible for anybody with a phone, tablet, laptop or PC out there to be a customer. I believe it will succeed. And I fully expect revenues and earnings per share will grow at 10% to 15% over the coming years. That growth should handily outpace that of the S&P 500, yet Microsoft still trades at a discount on a price-to-earnings basis.

I don’t expect that disconnect to last much longer. Already we’ve seen a rapid rebound from the post-earnings drop. And I expect that shares will continue to move higher in 2015.

What is Apple Hiding?

You’ll never hear about this from the 42 regular market analysts covering Apple – because either they don’t know about it… or they don’t want you to know about it. But Apple’s hiding a major secret from investors. See, all its most prized products – the ones everyone lusts after – would be utterly worthless without this one company. And there’s one other thing Tim Cook doesn’t want to let slip – especially to Apple investors: shares of this “secret” company do five times better than AAPL shares every time Apple launches a new product. Check out the full story now – click here.

Published by Wyatt Investment Research at