Alphabet Inc (GOOG)

One of the better large cap tech companies you can own. Very innovative suite of products. Always thinking about trying to do something new. The problem he sees is that search has been displaced by banners. Social media has come on and moved into their space and taken advertising dollars away. He likes their business model, but it may not be the go-go stock it once was. You will get better than average growth and you are not paying a lot for it.

There has been a lot of pressure on tech stocks with the selling to make way for the Alibaba IPO. This creates a buying opportunity. Google’s hands are in absolutely everything. She likes it. Incredibly well managed.

Thinks that 80% of the world is working off this company’s operating system for mobile and mobile is really the way we are all going. YouTube is a hugely undervalued asset. The fact that they are able, with all that cash, to acquire and invest in developing new technologies, makes it a company that you just have to own. Very reasonable valuations.

Next to Apple (AAPL-Q), this is his biggest weighting in technology. These are brilliant guys. They diversified the core business into other ancillary businesses. They spend a lot of money on R&D. Some of that has yet to come to fruition. The basic search engine is going to drive it for years to come. Trading at around 18-19 times earnings, which is a very reasonable multiple to pay for the growth that it has.

(A Top Pick Sept 6/13. Up 31.13%.) Announced some really great earnings. Their “cost per click” continues to go down, but the number of clicks continues to grow at a much faster pace. They have some competitive threats, but he loves the Android Operating system. Have about 85% market share.

(A Top Pick Aug 21/13. Up 33.32%.) This is the concept of home automation on a bigger scale getting you into a Google product. They develop good products, and are going to be here for the long haul.

(Market Call Minute) On her watch list. She might buy it on a pullback.

Google (GOOGL-Q) or Apple (AAPL-Q)? Given this choice, he would pick Google. On a balance sheet level, etc., they are very similar. Google is a software company whereas Apple is not so much, and gets about 60% of their revenue off of one product, the iPhone, and there has not been a real product from them for a long, long time.

Great balance sheet. Trading at a market multiple while it is growing at 3 or 4 times the rate of the average stock. Highly innovative. They own YouTube (media), Android and Search. Have 80% margins. An incredible company with highly innovative management team.

Compelling valuation, nicely priced. Forward PE of 20 and 18-20% growth. A dominant name. Have executed well in the Internet search area. 176 acquisitions over the last 5 years. They are transitioning well to the mobile space. Four out of five phones use the Android operating system.

She likes this. It is not super expensive. The biggest thing going against it is that it is Big, but when you actually look at what it is doing, it has transformed itself from a search engine to a very intelligent marketing machine. Still a lot of growth to come from this.

She was looking at this one quite closely when it got down to the $520 level. A leader in advertising/media, and they make a lot of money off their users. This is one that she would seriously consider putting in a portfolio. She is hoping for a general market pullback so she could get into this.

It doesn’t matter if you get the voting or non-voting share. They own the search market. They know a lot about their users. Better growth than anyone else and generating a ton of cash. The android operating system runs on 80% of the smart phones in the word and they give it away. If they ever monetize it, it would be tremendous.

If you can you should always buy voting shares. Thinks they set up the voting shares because they wanted to go out and make big acquisitions, not just with their cash which is enormous, but also with the currency they have with their stock. They’ll use their nonvoting stock to dilute it down so the voting stock will become more and more valuable. Has a tremendous cost of capital advantage, and will probably grow about 18%-20% per year. Trading at around 18X earnings, a marginal premium to the average stock, and yet it grows much, much faster than the average stock with a much, much stronger balance sheet.

An advertising juggernaut. The key to long term success for them is mobility and the ability to capture the attention of people in all places and through all devices. There has been a little bit of controversy over a “volume versus price” argument, what you pay for per click and what you’re volume is. Feels there has been a little bit of overreaction that their margins on the “pay per click” have been falling. Thinks this has been misunderstood. People when they are walking down the street are not going to be as active in terms of spending money, but that doesn’t mean over time they are not going to spend money. He prefers class C voting shares (GOOGL-Q).