5 Best Magic Formula Stocks To Buy Now

4. Alphabet Inc Class A (NASDAQ: GOOGL)

Gotham Asset Management unloaded 11% of its stake in Alphabet in the third quarter. The firm now owns 28,625 shares of the company, worth $41.95 million.

Like Facebook, Alphabet’s unit Google is also facing the heat over its data privacy policies and market dominance. On Dec. 17, a lawsuit backed by 38 U.S. states claimed that Google is maintaining a monopoly over internet search via illegal contracts and tactics.

However, Alphabet continues to grow and diversify its revenue streams. The company is increasing its hold in lucrative markets like Cloud, self-driving cars, video and robotics.  In the third quarter, Alphabet’s ad revenue totaled $33.9 billion, up from $29 billion a year ago.  Alphabet’s YouTube, which brought in $5 billion in advertising revenue in the third quarter, now has 30 million paid subscribers.

Baron Opportunity Fund said the following about Alphabet in its 2020 Q3 investor letter:

“Considering solid Fund inflows, we added to long-term holding Alphabet Inc. to maintain its weighting in the portfolio. Alphabet is the parent company of Google, the world’s largest search and online advertising company. We increased our position in Alphabet this quarter as a protracted COVID-19-related recovery in travel and brand advertising presented an attractive buying opportunity. We are encouraged by improving trends in both search and YouTube, driven by durable tailwinds to e-commerce and local advertising, as well as the continued shift of video advertising dollars away from linear television as consumers increasingly cut the cable TV cord. We believe Google is becoming slightly more disciplined in capital allocation than it has been historically. Lastly, Google Cloud, which this quarter achieved a $12 billion revenue run rate under the leadership of Thomas Kurian, is having increasing success competing with larger vendors, due to its strengths in security, open-source, and data analytics.”