Alphabet Inc (GOOG)

(A Top Pick June 2/14. Down 4.96%.) There has been a lot of negative opinion on this recently, but it reminds him of Microsoft when it was in the mid-$20 and people were saying there was no more growth. This hasn’t even slowed down its earnings growth. The catalyst could be some of their outside assets, such as the Android operating system, which owns 70% of the smart phone market globally. He likes this and thinks it is a great long-term story.

(A Top Pick June 24/14. Down 2.55%.) This seems to be a tech name that has taken the year off. He still likes it. Trading at 19X Forward Price Earnings with a 17% expected long-term growth. PEG ratio is just over 1 which offers pretty good value. They are putting a lot of money into R&D. A lot of things are happening. They are monetizing YouTube, getting into glasses, etc., etc.

This has really lagged large cap tech. A good name for Internet exposure. They are the leader in online search. She feels online advertising is going to be going through a secular growth phase for many years to come. The stock has lagged because mobile has been growing faster than desktop, and Facebook (FB-Q) has been gaining share. But she feels the whole media channel has a lot more room to grow, and there is more than enough ad dollars for both companies to participate in.

(A Top Pick June 30/14. Down 7.27%.) He is disappointed. It has more money in the bank this year than last year. Profits are up and it is trading at a reasonable valuation. People are concerned about their strategies and how other companies are earning more advertising revenues in native apps. They are also disappointed that the company is not using its YouTube app fast or aggressively enough compared to Facebook (FB-Q). Profits are still growing at about 20% and trading at 17X earnings. Has dominant market share in its businesses. Also, dealing with the European antitrust investigation, which he thinks they will likely move through, but will probably cost them some money. Also, feel investors are concerned about the company’s ability to grow rapidly in the Chinese market, where most of their applications are blocked by Chinese authorities.

(A Top Pick May 6/14. Up 5.57%.) Sold this at a profit of about 18%-19%. There is a little bit of criticism that they are not focusing on their core business, but are doing some sort of social activism research and investing. The Google “L” is the voting and this is a way to play it. It is now starting to break away from the GOOG. He is looking to get back into this name as some point.

A really strong franchise. When people want to search, this is the go to place to do it. It has had a pretty good run in the last year and it might be going sideways for a while, but long-term it is a great company.

(A Top Pick June 2/14. Down 2.3%.) Kind of choppy, but they are not doing anything wrong. Hitting their numbers and everything is in place. The reasons to like this company are all still in place. What they own and deliver in Search is so important. Their acquisition strategy is exceptionally strong. Also, the android operating system, which he thinks is the most powerful operating system globally, is certainly the most used. They own it and they are giving it away for free, but this is an asset they are going to monetize as some point in time.

This is attractive. Trading at 1 or 1.1 PEG ratio. It’s PE relative to its growth is relatively attractive. They’re spending a lot of money on R&D, which will bode very good benefits down the road. Thinks this is a name that will command a stronger premium once again.

R&D spending in the last quarter has been quite high. Seem to have some pet projects they keep funnelling money into. On the android side, for example, they continue to give it away for free, but what that does is allow applications and data to be pulled off. That is positive in the long term. The advertising side continues to be dominant. Their shift to mobile, accepting pages that are typically enhanced to work on mobile applications, is another avenue. It really comes down to a longer-term investment horizon and believing they will be able to move around that big advertising elephant. Good value, good cash and a good balance sheet are important in this market. He is positive on this company.

Above average revenue growth of 13%. Cash is piling up and they are spending money on R&D. Advertising is still moving to the Internet. You are not paying a very high price. The stock has done nothing for a couple of years so the market has to catch up.

Feels that people are questioning the long-term viability of this company’s model, in terms of monetizing the different initiatives that they have. Also, their dedication to good management, expense control, etc. He thinks the company is responding. What it is doing behind the scenes is getting less and less expensive, because they are growing. Have brought on a new CFO to handle their cost control. There are going to be some good things from this company.

(Top Pick Jun 2/14, Down 1.91%) The bears think growth is slowing, but Google owns a huge asset in their data. There is no reason not to continue to own it. Earnings are coming out tonight. They own the search market. No one attributes any value to the Android operating system, but it runs 60% of the smart phones in the world. Wait until you see the earnings before going in.

Technically this stock has been range bound and consolidating. Numbers have been decent, not exceptional. When he looks at the Internet space, there are a whole bunch of companies that are beating and exceeding expectations with estimate revisions going higher. If this broke about $580, technically it would look more attractive. It is sort of stuck in neutral, and he would wait to see it get in gear before he put money into it.

(A Top Pick April 14/14. Up 0.27%.) Dealing with some competitive threats. There has been the consistent drop in cost per click they are receiving and have done the best they can to mitigate that. The competition of Spacebook has done an exceptionally good job. Google is making a lot of investments behind the scenes that we don’t even know about. Great balance sheet and exceptionally profitable.

Trading at 13X ex-cash earnings next year, and is a pretty cheap price for a company that is growing twice or 3 times as fast as a regular S&P 500 company. What he doesn’t like is that they keep issuing a lot of options and not doing anything with the growing cash base. He would like to see them start buying back stock or start a dividend. (See Top Picks.)