If Louis Basenese would only be allowed to buy one megacap stock in the next decade, he would pick Google Inc (NASDAQ:GOOGL).
The Disruptive Tech Research founder revealed his top stock pick in an interview with CNBC where he considered his pick in the unlikely scenario that he can only buy one tech stock in the next ten years.
“[…] It has to be Google. There’s no other tech company like it. Think about all of the other companies that consider it their number one competitor for different reasons. You’ve got Apple, Amazon, Facebook, Microsoft [and] even Yahoo! The reason I like it from a long term megacap play in tech is because you get a dominant player in search, but you also get exposure to all these super compelling long-term technology trends,” he said.
He mentioned that Google Inc (NASDAQ:GOOGL) has interests and projects in self-driving cars, nanotechnology, self-driving cars and more. Furthermore, he said that Google is working on so many projects that people do not exactly know what might come of the technology giant.
This is, however, precisely why Eric Schiffer of Patriarch Equity says Google Inc (NASDAQ:GOOGL) might not be the best option. He said that many of Basenese’s points are very speculative and that 10 years is like a century in the technology space.
Schiffer said that at the moment, the internet search and advertising giant is not dominant in mobile monetization. The same goes for the social media space where Google only has 10% of advertising, he said.
That’s a problem especially since millennials are focused on social media. Schiffer said that there may be better plays although Google seems to be a good company.
This did not persuade Basenese though as he said that Google Inc (NASDAQ:GOOGL), the world’s most visited site in 2014, can afford to do all these projects because it relatively does not cost them much. The company is spending just roughly 15% of revenue on research and development, he said.
The tech giant still has dominant market share, he added. It has 60% share in the search space globally and it also has 90% share in mobile traffic through Google Search.
Asked why the stock is down while the technology sector is up, he pointed to the Russel 2000 going up which may mean that people are trading smaller capital technology companies, which he said has the potential of 100% returns, and not bothering with what he calls megacap companies.
He said that people investing in Google should have realistic expectations. Basenese also noted that the stock has about 10% to 20% upside at a consensus price target of about $645. He also said that the valuation is reasonable at 27 times earnings.
Stanley Druckenmiller’s Duquesne Capital owned 166,810 Google Inc (NASDAQ:GOOGL) shares by the end of the third quarter.