Alphabet Inc (GOOG)

(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.)

(A Top Pick March 19/14. Down 1.15%.) Very innovative company, but going through a “low” in terms of monetization of new products. They are putting in huge amounts of CapX into new developments. It continues to grow fundamentally at a much better rate than the price might indicate which leads the valuations to come down. This is a solid 15% grower which represents a really good value.

He likes this business in terms of the scale that it has available to it. Technically speaking, its revenue generation is just advertising. A very well-run, highly technological, well diversified advertising business. The amount of information it has is a huge asset for anybody else who wants to tap into smart marketing.

(A Top Pick April 14/14. Up 2.84%.) Their profits have grown and the company is cheaper than it was a year ago. They’ve advanced some other technologies that much more. They still have the dominant operating system in Android. Innovative company and a strong, strong balance sheet. Very reasonable valuation metrics at 16X forward earnings, which is a big discount to the market.

Revenues and earnings continue to decline. Highly dependent on the search and advertising business, but are expanding and diversifying within that space. Putting a lot of money into R&D. If it wasn’t for that, their earnings would be even more powerful than they are today. He likes this long-term.

One of the best business plans in the world. Advertising is all about a push business. If you want to advertise, you have to spend lots of money, and hopefully people will see it. On the other hand, if people want to look you up, all they have to do is Google you. This is the greatest advertising business model in the world. They make about 95% margin selling keywords. They are using the cash flow to make bets in other areas, which have huge markets such as networking, cable, Google glass, YouTube, etc. They are really under-reporting their earnings because they are investing so much in CapX and R&D. Their earnings would be a lot higher if they weren’t doing that. There is potential for them to start a dividend as well as share buyback.

This looks fine. Chart shows a long uptrend from 2012, followed by a correction in 2014. This formed an ABC formation. What is bullish is that the corrected period didn’t make a new low. He thinks this works higher and takes out the old highs.