There are some investing principles that virtually everyone should follow, including diversification. This is one of the safest ways to ensure your portfolio is balanced and you reduce risk where possible.

While diversification is so important, you can admit that not all stocks are created equal and some hold a special place in your heart (and your portfolio). I am no exception.

If there was only one stock that I was particularly passionate about and that I would buy and hold for the long term, it would be this one Microsoft (MSFT 2.17%). Here’s why.

Microsoft is the technology one-stop shop

It’s not unusual for a large technology company to operate across multiple industries. However, no one is as established in so many industries as the all-rounder Microsoft. Below are some areas in which the company operates:

• productivity: Microsoft Office – which includes Excel, Teams, PowerPoint and Word – has long been the standard for business and personal productivity tools.
• Cloud: Microsoft Azure is the second largest cloud platform in the world with a market share of 20%. It runs after Amazon Web services with a market share of 31%.
• Hardware: Apple Microsoft rightly gets a lot of praise for its hardware, but Microsoft’s PCs and tablets are used by millions of people worldwide.
• Play: Xbox lags behind PlayStation in users and units, but remains a driving force in the gaming industry. Microsoft’s acquisition of Activision Blizzard should set the stage for continued success.
• Social media: LinkedIn is the leading networking platform with over a billion users.

When I think about a stock to buy and hold, I look for a stock whose business doesn’t rely too heavily on a single product, service, or (in this case) industry. Microsoft is an example of this in the tech world.

It matters who Microsoft’s customers are

Having lots of customers is a great thing for any business, but WHO These customers also play an important role in the development of a company. In Microsoft’s case, many of these are other companies.

Think of the many companies around the world that rely on its products and services. Countless companies provide their employees with PCs, Excel is an integral part of the financial world, the cloud has become an important part of modern companies and LinkedIn is an important recruiting hub. And these are just a few examples.

When the economy is less than ideal, individual consumers are more likely to cut spending than businesses. It’s much easier for consumers to forego upgrading a smartphone than it is for companies to cancel their cloud services or stop using tools like Excel or Teams. This is largely why Microsoft’s financials have remained strong despite recessions and similar economic downturns.

MSFT revenue (annual), data from YCharts.

That’s not to say that Microsoft never runs into difficult problems; Virtually every company does it if it has been around long enough. However, if you’re looking for a single stock to hold on to, you want a company that can handle these challenges.

A premium price for a premium company

Microsoft isn’t cheap by most valuation standards, but that’s to be expected. High-quality companies with high visibility often achieve top-notch reviews. The stock trades at around 32.5 times this year’s forecast earnings, slightly below its average over the last decade, but on par with Apple at just under 33.

MSFT PE ratio (forward), data from YCharts; PE = price-earnings ratio.

You shouldn’t ignore valuations when investing, nor should you focus on them when investing for the long term. That may have an impact on short-term returns, but if you look back a decade or more from now, chances are you won’t be relying too much on the stock’s price-to-earnings ratio at that point.

Warren Buffett said it best. It is far better to buy a wonderful company at a fair price than a fair company at a great price. And with Microsoft, you know you’re getting a wonderful company.