Security Software Adds a New Profitable Angle to this Big Tech Play

It’s often thought that the larger a company gets, the fewer paths it has to grow. In the case of technology, however, that’s not always the case. A tech company can add a new sector while maintaining old ones, allowing for much more growth potential than a non-tech company.

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  • For instance, one analyst sees one of the largest tech companies in the world boosting its size even further, by embracing security software.

    That growing niche is capable of adding $30 billion in annual sales to a company already earning $160 billion annually. The company? Microsoft (MSFT).

    The software giant is already looking to unveil its latest video gaming console, and a work-from-home economy has driven its software sales higher. It’s even faring well with its social network LinkedIn, which has seen rising use amidst a struggling job market.

    Adding in security software would play well into those strengths while also adding further diversification to the company’s sales, according to a Barclays analyst. That’s certainly true, but there’s room for further growth at the company even without this new niche.

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  • Action to take: We remain bullish on Microsoft overall, given the company’s scope, best-of-breed nature in a variety of business segments, and profitability. Investors should consider picking up shares on any pullback.

    For traders, the February 2021 $225 calls, which trade for around $9.10 per contract, are likely to provide mid-to-high double-digit returns as shares head higher overall.