Eagle Capital’s Top 5 Stock Picks

2. Alphabet Inc. (NASDAQ: GOOG)

Alphabet is the second largest position in Eagle Capital’s portfolio, accounting for 8.02% of its 13F portfolio. Alphabet is another value stock perceived as a growth stock by most investors. We believe its earnings multiples will inch higher and higher as more value investors realize the upside potential and flock into the stock. Here is what Wedgewood Partners said about Google in its 2020 Q4 letter:

“Alphabet’s core Google revenues grew +9% during the quarter, a meaningful acceleration from the -8% decline during the COVID-19-impacted second quarter. The Google unit also unexpectedly showed some modest expense leverage after several quarters of heavy reinvestment, driving double-digit earnings growth at Alphabet. We would not be surprised if that leverage is short-lived. However, Alphabet continues to meaningfully under-earn relative to its potential, and we welcome any effort that brings forward, or at least highlights, the Company’s pent-up earnings power. On the latter score, Alphabet announced it will be providing more detailed operating segment profit data in the coming year.”

Not every fund manager is bullish on Alphabet though. Nelson Roberts Investment Advisors reduced its position in GOOGL:

“We trimmed our position in Alphabet Inc. to a market weight as we noted elevated risks for the company. Aside from the increasing regulatory threats, we reduced our portfolio’s total exposure to the five largest stocks in the S&P due to concerns about market concentration. Alphabet also has large exposures to travel and leisure customers that have been impacted by the shutdowns due to COVID-19.”