July 16 (Bloomberg) -- Investors should buy Microsoft Corp. in the months before the company introduces a new version of Windows, not afterward.

The CHART OF THE DAY shows that Microsoft shares performed better in the six months before the release of every major version of Windows for desktop computers since Windows 95. The latest installment, Windows 7, will go on sale Oct. 22.

Investors often buy before a major event and sell the shares when it occurs, said Brendan Barnicle, an analyst at Pacific Crest Securities in Portland, Oregon. Shareholders already missed out on a 29 percent increase in Microsoft shares last quarter. There is still room for the stock to increase to $28, Barnicle said.

“The right time to buy was a few months ago, but that doesn’t mean that it can’t perform from these levels,” said Barnicle, who rates the shares “outperform.” “What you don’t want to do is wait until they ship Windows 7, because historically the stock has gone down at that point.”

Last month, Goldman Sachs Group Inc. added Microsoft, the world’s largest software maker, to its Conviction List of recommended stocks. Shares of the Redmond, Washington-based company could reach $29 in the next year, up from a previous target of $25, Goldman Sachs said.

Microsoft is scheduled to report fiscal fourth-quarter earnings on July 23.

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

Last Updated: July 16, 2009 00:01 EDT