5 Best Quality Stocks to Buy Now

4. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 153

% of iShares MSCI USA Quality Factor ETF Holdings: 1.74%

Alphabet Inc. (NASDAQ:GOOG) is a multinational technological conglomerate with headquarters in Mountain View, California. Google, the internet media powerhouse, is a completely owned subsidiary, and contributes to 99% of Alphabet’s income.

Alphabet Inc. (NASDAQ:GOOG) was held by 153 hedge fund holders in our database at the end of Q2 2022. The stakes held by hedge funds in the stock collectively value over $22.2 billion. TCI Fund Management was one of the stock’s leading stakeholders in Q2, owning Alphabet Inc. (NASDAQ:GOOG) shares worth over $5.4 billion.

L1 Capital International, an investment management company, mentioned Alphabet Inc. (NASDAQ:GOOG) in its second quarter 2022 investor letter. Here’s what they said:

“Alphabet Inc. (NASDAQ:GOOG) is by far the largest online advertising business globally, dominating Search outside of China and other protected markets. Online advertising is driven by eCommerce – not just buying online, but also omnichannel (for example, searching for a product online and then buying it instore).

Retail sales have consistently shifted online. Historically, eCommerce has increased its penetration of adjusted total U.S. retail sales by around 1% per annum. However, due to COVID-19 and associated lockdowns, eCommerce penetration stepped up by 5% in 2020 and now accounts for over 20% of adjusted retail sales (excluding food services, automotive and gas stations), up from 6% in 2010 (see Figure 6).

Alphabet has been a major beneficiary of COVID-19, with its advertising revenue increasing 43% to nearly US$210 billion in 2021. Naturally this level of growth is unsustainable particularly in a worsening macroeconomic environment and some retail activity is shifting back offline as people are less restricted by COVID-19. However, the established trend of increasing eCommerce penetration will not reverse, and we expect Alphabet’s advertising revenue to continue to increase, albeit after a period of muted growth in 2022 and 2023. There are also bright spots for Alphabet such as travel advertising, which is recovering strongly post COVID-19…”