5 Cash-Rich Defensive Stocks to Buy Before Recession

3. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 153 

Free Cash Flow as of August 29: $65.18 billion

Alphabet Inc. (NASDAQ:GOOG) is a diversified technology company. Even as the US economy slows down and hammers growth stocks, the company is expected to weather this storm better than peers. One of the reasons for this is that the firm recently posted $65 billion in free cash flow over the last year. This will enable the company to continue to sponsor growth initiatives in the coming months even amid recession fears. The online ad market is also expected to recover, giving a further boost to the shares. 

On August 3, Tigress Financial analyst Ivan Feinseth maintained a Strong Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and raised the price target to $186 from $183, noting that the core business of the firm had shown resilience despite a larger market slowdown. 

Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG), with 2.4 million shares worth more than $5.4 billion. 

In its Q2 2022 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:

“Alphabet Inc. (NASDAQ:GOOG) grew its core search revenues +24% on a +30% year-ago comparison. Despite this stellar top-line performance, shares sold off as the market began to discount fears of a recession. However, the stock has outperformed relative to other holdings as core Google Search has been less affected by disruptions related to Apple’s privacy initiatives. Alphabet’s Cloud segment is generating revenue at a $24 billion run rate but is still running at a loss. We think this business can generate much better margins at some point. In the meantime, the Company has 4% to 5% of shares authorized for repurchase which is an attractive use of capital as the stock trades for about just 18X 2023 consensus estimates.”