As far as long-term large cap technology companies go, Google parent Alphabet Inc. (NASDAQ:GOOG) remains one of my top picks for investors with long investing time horizons today. This stock has more than exceeded its pre-pandemic highs, fully recovering and then some, posting very strong performance at a time when many stocks are still depressed.
Despite being a technology company, Google’s valuation relative to its growth is not unreasonable. This is a stock that has always been expensive, but less so in recent years, as investors price in a slightly lower level of long-term growth, given the company’s sheer size. That said, this is a monopoly business with extremely high barriers to entry and pricing power, so the long-term fundamental economics of Alphabet’s core advertising business is likely to remain in place for a very long time.
The coronavirus pandemic really separated the winners from the losers in 2020, with Alphabet clearly being a winner. A shift to online shopping and e-commerce generally from traditional bricks and mortar retail has been accelerated. I expect the secular growth drivers that have propelled this stock higher in one of the worst economic times we’ve seen in quite a while to continue over the long-term. This level of safety or defensiveness with respect to the company’s future growth profile appears to have garnered a premium of late, and this stock isn’t cheap, so I’d suggest investors looking to buy this stock do so on dips moving forward.
Invest wisely, my friends.
