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Microsoft (MSFT) and Six Flags (SIX): Growth and Income Stocks

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In this week’s growth and income video, I discuss Microsoft (MSFT - Free Report) and Six Flags Entertainment (SIX - Free Report) , both of whom made big announcements over the past few days. 

Microsoft (MSFT - Free Report) has beat both the Zacks consensus earnings and revenue estimates for the past six consecutive quarters.  Their cloud platform Azure has been a big growth driver for the company, and is expected to receive a nice boost from the company’s most recent acquisition.

MSFT acquired GitHub, a leading software development control platform utilized by 28 million developers, for $7.5 billion (its third largest acquisition).  This platform is used for code development and among its customers are some of the top tech companies; Amazon, Google, Apple, and even Microsoft too.  Moreover, the platform serves as a social network for developers. 

MSFT is planning on integrating the company’s cloud services into GitHub in-order to attract developers to its cloud platform Azure.  Further, management sees this acquisition as a way to accelerating the enterprise use of GitHub for direct sales and partner channels. 

Outside of the big purchase, the company has been performing above expectations, and the stock price has responded.  Below is the Price and Earnings consensus graph, and as you can see the stock price has been on an upwards trend for the past three years.

To add to this growth story, MSFT pays a solid +1.64% annual dividend yield.

Six Flags Entertainment (SIX - Free Report) a Zacks Rank #1 (Strong Buy) made a two important long-term growth announcements over the past few days.  Further, the company pays out an impressive +4.47% annual dividend yield.

SIX recently announced that they acquired the lease rights for 5 new parks; Houston, Phoenix, 2 in Oklahoma, and Buffalo.  These five parks generated 2 million attendees last year, which will be added to the 30.4 million annual visitors who attended SIX’s parks. 

Further, management announced its international expansion plans as they will be adding 3 new parks in Nanjing China (expected to begin opening in 2021).  This will add to its international portfolio of parks in the UAE, Saudi Arabia (announced in April of 2018), and Zhejiang China. 

SIX beat both top and bottom line expectations in Q1, and is currently expected to see earnings to grow by +33.8% and revenues increase by +7.76% for fiscal year 2018.  Moreover, the quarterly report showed that SIX posted a record-high Active Pass Base while increasing prices for both food, and ticket prices.  On a year over year basis, revenues improved by +29%, and are on track to post a record performance in 2018. 

This positive news on both domestic and international growth has caused analyst estimates to increase for the next two quarters, and for FY 2018 and 2019.  The table below shows the positive revisions to earnings.

Along with its impressive +4.47% annual dividend yield, the company has a bit more than $250 million remaining in its stock repurchase program.

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