GOOGL

Google Shows Why It Has Been a Best Idea

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Sometimes valuation is its own catalyst. That’s what we think has happened to Google (GOOG, GOOGL). This isn’t our first note on Google; the search giant was added to the Best Ideas Newsletter portfolio October 2012 at ~$340. Shares are approaching $700 at present. As with all of the holdings in the newsletter portfolios, they represent our best ideas at any given time. Image Source: Google Google’s financial profile continues to be one of the best in our coverage universe. A cash balance of nearly $70 billion showcases the firm’s tremendous financial flexibility; its short and long-term debt was just over $5 billion at the end of the second quarter. Cash flow generating from operating activities expanded nicely on a … Read more

Best Ideas Newsletter Holdings Surge

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It’s hard for us to not be able to recommend stocks to you. That’s not what we do. We’re not a financial advisor, so we can never tell you what to buy or sell. This is not only the responsible thing to do, but it is also the law. We can’t possibly know your personal financial goals or risk tolerances. We do our best, however, to highlight our business analysis and the market mispricings that we see. Stocks that we pound the table on are included in the Best Ideas Newsletter portfolio. Stocks that we like as dividend growth ideas are included in the Dividend Growth Newsletter portfolio. We’ll be adopting a new designation for these companies in lieu of … Read more

The Invincible S&P 500?

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This is the performance of the S&P 500 (SPY) since the March 2009 panic bottom. It’s incredible, to say the least. US stocks, as measured by the S&P 500 have more than tripled since the doldrums of the Financial Crisis, and for those of us that lived and breathed the markets during every day of the Financial Crisis, the lack of volatility and the ongoing, steady advance seemingly month after month during the past 6-plus years have been incredibly peculiar–and perhaps contradictorily–less-than-comforting. Any market that sets prices on the buying and selling behavior of a wide-variety of participants with differing views shouldn’t be so coordinated and one directional. It seems unnatural, or at the very least, unusual. While others are … Read more

Google’s Cash Is Real

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Which company ended 2014 with total cash of $64.4 billion and short and long-term debt of $5.2 billion? If you read the title, you can probably guess it without much difficulty: Google (GOOG, GOOGL). Focusing purely on beats and misses of accounting earnings-per-share ignores one of the most important financial statements: the balance sheet. Not considering the financial health of a company, and specifically a firm’s net cash position (its total cash less total debt) is similar to ignoring an individual’s savings account and obligations when calculating his/her net worth. It just doesn’t make any sense. Yet, the industry loves throwing multiples on accounting earnings with little regard to a company’s net cash or net debt position. Mr. Market’s love … Read more

Thanksgiving Weekend Sales Were Weak…

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According to preliminary survey results released Sunday by the National Retail Federation, retail sales during the Thanksgiving weekend tumbled 11% to $50.9 billion from $57.4 billion during the same weekend last year. Executives are having a difficult time explaining the sharp drop off in retail sales (RTH), given similar aggressive strategies and promotions as previous years, but we think there are a few reasons for the hefty decline. For one, the lure of the post-Thanksgiving “mad-rush” may be wearing off, and the emerging “negative” social stigma of those willing to shop (instead of resting with family) coupled with those who believe they are “being forced to work” during the holiday (see Walmart strike) without fair wages may be turning off … Read more

Google’s Competitive Advantages As Strong As Ever Following Third Quarter Report

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Consensus estimates aside, Google (GOOG, GOOGL) issued a very strong third quarter Thursday. The firm reported consolidated revenues of $16.52 billion in the quarter, an increase of 20% on a year-over-year basis. Non-GAAP operating income for the period was $5.36 billion, which compares to non-GAAP operating income of $4.62 billion in last year’s quarter, an increase of 16%. Non-GAAP EPS in the third quarter of $6.35 advanced 12.8% over the $5.63 mark in the prior-year period. Much like that which occurred in eBay’s (EBAY) third quarter, which it reported earlier this week, operating leverage was absent in Google’s business model during the period. Google’s bottom-line growth rate was still solid, but we would have liked to see earnings growth in excess … Read more

Google’s Net Cash Position Grows to $56 Billion

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Google (GOOG, GOOGL) is trading just shy of a market capitalization of $387 billion at the time of this writing, one of the largest US-traded stocks out there. For a company this big to grow revenue 22% in its second quarter, which it reported Thursday, is quite the feat. The firm’s non-GAAP operating income came in at $5.14 billion, showcasing a 32% margin, up from $4.21 billion, matching the pace of growth on the top line. Non-GAAP earnings-per-share in the second quarter of 2014 was $6.08, compared to $4.96 in the second quarter of 2013, representing year-over-year growth just slightly higher than the 22% mark. Google is simply executing fantastically, and we continue to like shares in the Best Ideas … Read more

Microsoft to Slash 18,000 Jobs

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Quick and agile – that’s what new Microsoft (MSFT) CEO Satya Nadella is looking to embed in the firm’s culture with a sweeping announcement that it will realign its workforce. In a memo to employees, the company revealed the largest layoffs in its corporate history, targeting the reduction of the size of its overall workforce by up to 18,000 jobs. The work toward synergies and strategic alignment on its recently-acquired Nokia (NOK) Devices and Services operations is expected to account for 12,500 job cuts, comprising both professional and factory workers. The vast majority of employees will get the pink slip over the next 6 months. Though it is never pleasing to hear that workers are losing their jobs, from an investment standpoint, … Read more

Google’s First-Quarter Performance: Business as Usual

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On Wednesday, Google (GOOG) reported decent first-quarter results. The search giant’s revenue increased across-the-board on a year-over-year basis: Google properties revenue advanced 21%, network revenues increased 4%, while other revenues jumped nearly 50%. This is impressive year-over-year performance for any firm regardless of its size, but the market had expected even more from the Internet behemoth. What spooked investors a bit was that Google’s revenue declined across-the-board on a sequential basis (from the December quarter to the March quarter), representing somewhat of a divergence from recent historical patterns. Nonetheless, we put greater weight on the year-over-year numbers because they correct for seasonality. While we liked what we saw in the first quarter, the market is not necessarily incorrect in its … Read more

Focus on a Rules-Based Process Not on Short-term Outcomes

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By Brian Nelson, CFA …you should be skeptical of what investment advice you use and who your sources are. (Investment gurus) give…seemingly solid advice in (their) columns, but (as) it turns out (their) stock picking skills don’t translate so well into the mutual fund industry… …Part of the problem is that you have no idea what they’re actual track record is or the conviction they hold on each recommendation they put out there. The talking heads have no idea what your risk profile and time horizon are. There’s a huge disconnect between financial predictions you read about or see on TV and your personal circumstances. That’s why it’s so important to focus on a rules-based process instead of short-term outcomes. It … Read more