3. Alphabet Inc. Class A (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 179
Total Value of Hedge Fund Holdings: $21.9 Billion
Ranking 3rd in our list of 15 best American stocks to buy now is Alphabet Inc. (NASDAQ:GOOGL). The multinational conglomerate first went public in 2004 with an IPO price of $85. Alphabet Inc. was one of the best American stocks that thrived during the pandemic with advertisers’ spending flood. Google’s ad segment accounted for 81% of Alphabet’s $56.9 billion revenue in the fourth quarter of 2020, up 23% from the previous year.
Alphabet Inc.’s (NASDAQ:GOOGL) revenue in the first quarter of 2021 came in at $55 billion, up from $41.2 billion during the first quarter of 2020. Shares of GOOGL rose 61% over the past twelve months.
There were 179 hedge funds that reported owning stakes in Alphabet Inc.’s (NASDAQ:GOOGL) at the end of the fourth quarter, up from 162 funds a quarter earlier. The total value of these stakes at the end of Q4 is $21.9 billion.
Polen Capital Management mentioned Alphabet Inc.’s (NASDAQ:GOOGL) in its Q1 2020 investor letter:
“For our top contributors, each generated strong returns for different, but fundamentally based reasons, in our opinion. Alphabet saw renewed strength recently as advertisers generally resumed spending after a short pause during the pandemic.
Alphabet experienced some challenging quarters in 2020 as many companies paused their advertising spend. But, the business bounced back recently, spurring a strong recovery in the company’s share price. Even during such a challenging period, the company still compounded revenue at 14% in constant currency for 2020.
This is partly due to Alphabet’s multiple growth engines. For example, while its search business was negative one quarter and only grew by 6% during another, YouTube ads and Google Cloud Platform (GCP) grew at over 30% and 46% during the quarter, respectively. YouTube and GCP combined now contribute over 50% of the company’s growth, which we believe is a testament to a strong culture of innovation, a long-term mindset, and prudent capital allocation. With search bouncing back this most recent quarter–growing 17% –we believe that Alphabet continues to be well-positioned to durably compound earnings at or above 15% for many years to come. It remains one of our largest positions.”
