15 Best Stocks to Buy According to Hosking Partners

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1. Alphabet Inc. (NASDAQ:GOOGL)

Hosking Partners’ Stake Value: $116,400,350

Percentage of Hosking Partners’ 13F Portfolio: 4.3%

Number of Hedge Fund Holders: 216

The parent company of Google, Alphabet Inc. (NASDAQ:GOOGL), provides a variety of platforms and services through its Google Services, Google Cloud, and Other Bets segments. Known globally for products like Google Search, YouTube, and Gmail, Alphabet’s success is largely due to its dominance in the search engine market and lucrative deals with companies like Apple, making Google Search the default on many devices. Additionally, Alphabet is a significant player in the AI software industry, competing with major entities like Microsoft-backed OpenAI.

Alphabet Inc. (NASDAQ:GOOGL) experienced significant growth in Q2 2024, with a 15% year-over-year revenue increase and a 31% rise in diluted EPS. The Google Cloud Platform (GCP) grew nearly 29% YoY, strengthening its position in the cloud market. The company’s first dividend and share buyback program further enhance its attractiveness. Despite a recent 14% drop in its stock price, it is valued at 20-25x FY2024 earnings, indicating a potential buying opportunity. Analysts have set a price target of $203.74, projecting a 25.03% upside as of August 16. Although regulatory challenges and AI competition pose risks, Alphabet’s strong data capabilities and innovation provide resilience.

Patient Capital Opportunity Equity Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q2 2024 investor letter:

“Alphabet Inc. (NASDAQ:GOOGL) was a top contributor in the second quarter, finally catching up to its peers in the Magnificent 7. The company gained 20.8% in the period following strong first quarter earnings, a new $70B repurchase program (3% of shares outstanding) and the initiation of a cash dividend ($0.20 per share; 0.42% yield). We continue to believe the market underappreciates Google’s exposure to AI with its Gemini model being integrated into search results, YouTube advertising and its cloud offering. We continue to think that the cloud players will be the AI winners in the long-term, with Google being well positioned to take advantage. While the company trades at 24x 2024 earnings, if you remove the money-losing and under-earning businesses, you realize that you are paying below a market multiple for the core Google business. We do not believe there are many other AI winners trading at such an attractive multiple.”

While we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

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