Friday File: Turmoil in Tech-Land, earningspalooza continues, plus some small buys and a couple new watchlist stocks

Moving the deck chairs around at the top of the Real Money Portfolio, particularly in big tech... plus some new life insurance watchlist stocks, and earnings news from Hershey, Starbucks, Qualcomm, CoreSite and so many more...

By Travis Johnson, Stock Gumshoe, July 27, 2018

Crazy earnings week, eh? That leads me to a few adjustments to the portfolio, as my opinions have changed about a few stocks at the top of the Real Money Portfolio. So this week your Friday File is another run through a hodgepodge of stocks, starting with the one that I think is looking most impressive right now…

Alphabet (GOOG, GOOGL) — just wow from Alphabet, again, as they have spent the past couple years gradually becoming a “we want to impress investors” company instead of just a “we’re going to change the world, and investors can come along if they want” company under the new(ish) leadership team. The number of possible ways Alphabet can shape the future is incredible, and the scale of the company is almost impossible to fathom. They’re spending so much on continuing to grow out their computing power, partly just to support their incredible search and YouTube and other empires but partly also to compete with Microsoft Azure and Amazon Web Services in cloud computing, that it’s hard to imagine they can even spend money that fast… and still the profit rises.

Google is still the “mega tech” stock that I’m most comfortable with when it comes to valuation and risk, even here as we approach a $900 million market cap, mostly because they have so many businesses and so much cash… and this year it’s the only big cap tech stock I’ve added to as the other “FAANG” stocks have gotten more expensive. The valuation is getting a little richer, but that’s mostly because Wall Street is finding the story easier to understand, and worrying less about how much Alphabet is spending on those “other bets” like Waymo (self driving cars).

Part of my concern about Facebook earlier this year was “what if the business starts to look more like Google,” with tighter margins… which could have driven the stock down another 20% or more after it hit its lows during the Cambridge Analytica scandal (which has also blown over much more easily than I expected, at least so far).

And to some degree, that came into play once those market-shocking Facebook (FB) earnings came out… with growth a bit more muted, costs much higher than expected, and a return to really good growth instead of scary exponential growth. That hasn’t brought the stock down to crazy prices, it’s still a ...

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