Added small amounts to existing positions today in GOOGL at 1,195, FB at 173.2676, QSR at 41.38, VZ at 56.5288, CMCSA at 37.16, COF at 56.68, BRK.B at 187.72.
Here is my previous analysis/trades for all positions:
- Alphabet Inc A (GOOGL) – Buy
- Berkshire Hathaway Inc. (BRK-B) – Buy
- Capital One Financial Corp (COF) – Buy
- Comcast Corporation (CMCSA) – Buy
- Facebook Inc (FB) – Buy
- Restaurant Brands International Inc (QSR) – Buy
- Verizon Communications Inc (VZ) – Buy
I added to my position in Alphabet Inc A (GOOGL) on 4/3/2020 at $1090.895. Alphabet is still our 8th largest position at this time.
The resumed downward pressure once again makes for a good opportunity to add more or initiate a position. If it stays or goes down more I most likely add more.
Not much new to say that I haven’t mentioned in previous posts accept that it appears that interest in paid search still remains strong. eMarketer recently reported that when polled, most advertisers claimed that paid search was the most likely channel to be retaining budget or receiving new money, though only 24% of respondents said they were keeping money in search compared with 47% who said they were pulling it from display, for example. About two-thirds of respondents thought performance media would get more of a focus in the coming months.
Here is my previous analysis: Alphabet Inc A (GOOGL) – Buy
I added to my position in Alphabet Inc A (GOOGL) today at $1065.9456. Alphabet is now our 8th largest position at this time.
Better known as Google, I first bought Alphabet back in 2007 at a split adjust price of $230.44. I’ve wanted to get more over the years, but either missed the opportunity or felt the valuation wasn’t right. Finally, the price is at a level I’m comfortable with. I love to buy into companies where I spend a lot and ones that I feel are crucial to my life and/or business. Alphabet/Google is one of those. The problem has been too many others felt the same way and therefore were willing to buy at any price. However, now people are panic selling and selling everything even companies that stand to benefit from the current environment. It’s very irrational.
Alphabet is becoming a Berkshire Hathaway of sorts of the modern world in it’s collection of wholly-owned companies where it has a core competency in that also produce huge amounts of cash, which it then can invest in pieces of other great businesses.
It’s no secret that Alphabet does depend a lot on ad revenue that it derives from from it’s Google search business, Youtube and Adsense partners.
Here are just some of the Google products/ services that I use and depend on:
- Google Voice
- Google Ads
- Google Adsense
- Google Analytics
- Google Search Console
- Google PageSpeed Tools
- Google Alerts
- Google Drive
- Google reCAPTCHA
- Google Shopping
- Chrome Browser
- Google Business Listings
- Google Trends
- Google News
- Chromebook (hardware)
Other businesses that they are invested in through their CapitalG and CV divisions that I use/ depend on are:
They also own Nest, Waymo, Calico, DeepMind, Verily, Google Fiber and are invested in Uber, Lyft, CrowdStrike, Zscaler, DocuSign, Slack, 23andMe and much more. It’s really impressive just how much they are involved in and it’s even more impressive is the success of many of their investments.
Google Ads is my largest expense overall in my life. I have depended on Google Ads since it’s inception for the largest portion of our retail sales on the our own retail sites and it’s the primary promotion method we use for the majority of our marketing clients. I believe that even with a downturn in the economy, marketing budgets will be cut more elsewhere and proven marketing channels where you can better track conversions like Google Ads will be kept. Youtube is considered to be the 2nd most popular social media platform the last time I checked and should continue to be more popular in the “stay at home” economy producing more ad revenue as well as revenue share from paid media channels.
Over time, their other businesses and other investments should help diversify their revenue streams more and reduce their dependence on Google Ads revenue.
The valuation has finally come down to a level I’m comfortable with. The PEG is 1.21. Still a bit higher than I like, but under the 1.50 threshold I look for. Having watched the company for years I don’t believe the opportunity to get it at a much lower price is likely. If it continues to go down I will most likely add more.
This morning Google is up on an analyst updating their target price to $700/share from $600/share. The analyst also highlighted Google’s future business potential.
I have noticed that often times an analyst upgrade or a when a prolific investor starts buying a stock, it becomes a self-fulfilling profecy.
Essentially, the analyst upgrade or the prolific investor can often make the price of the stock hit the target price or rise simply because they say it will. Many investors tend to gravitate towards stocks that other “authorities” have suggested are good ones to buy.
However, if the analyst or prolific investor proves to be wrong over the long term, the stock will sink back to previous valuations, which I have seen happen.
One example of this was with Pier One. I bought in thinking at the time their problems were short term and took advantage of the huge selloff due to what I thought was an over reaction to a couple poor quarters. Apparantly Warren Buffet felt the same way as he also bought in shortly after I did and this shot the price up quite a bit when people found out. However, the problems turned out to be more than Buffet or I thought and the price went back to down and continued further down below what we bought our shares at.
When I’m looking for new investments, I keep a list of all the companies of which I’m a customer. I perform my own analysis and research of a company and if I like what I see and I also see that the company passes by the analysts or other prolific investors, I will consider that as further validation of my research and most likely consider the company for my next purchase. However, I do not buy into a company just because someone else does or says I should. I have done that before and have been burned.
Two examples are AOL Time Warner and Kmart. I bought those years ago as they were rated buys by popular investment magazines at the time. I thought they would be good ways to diversify my own picks. They both turned out be two of my biggest losers. AOL fell to half of what I paid and Kmart went bankrupt meaning I lost my entire investment. Luckily, both of these were small investments in comparison to my whole portfolio, but the lesson was definately learned. Never blindly trust a stock analyst or prolific investor as they can be wrong.
In the case of Google, as a shareholder I’m glad that analysts are raising the target as it has already caused the price to rise and it probably will continue, but I do think that $700 in the short term is quite rich for the company and I think even at the current price, it may be wise to wait for a pull-back or for the next earnings release before putting more money into it. That is my personal opinion and I could be wrong.
Full Disclosure: I own shares of Google.