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Our monthly Fire Best Buys Now are designed to highlight our teamâs three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.
âBest Buys Nowâ Pick #1:
Alphabet (NASDAQ:GOOG)
Q1 results for Alphabet werenât a knockout but they were reassuring during what is a turbulent macroeconomic and competitive environment for the advertising giant.
Quarterly sales increased 6% in constant currency terms (3% actual) to $69.7bn while operating profits fell to $17.4bn due in no small part to $2.6bn in restructuring charges as the company downsized to prioritise profitability.
That core ad revenue grew despite many advertisers pulling back on spending as consumers and businesses tightened their belt was a welcome development. So, while 6% growth wasnât incredible, it was welcome all the same.
The challenge of rapidly improving chat bots and large language model-derived methods for answering queries presents a very real threat to Alphabet. But the company is not a laggard in AI, instead management need to confront this challenge by more quickly rolling out their own internally developed options and updating core products to meet consumer demands. Thankfully it looks like theyâre doing just this.
At 23 times trailing earnings Alphabet is not cheap but it very, very rarely is. At the end of the day this giant of advertising is still growing sales, has multiple levers to pull to enhance already impressive profitability and cash generation, has a fortress-like balance sheet and is buying back its own shares at a rapid clip. We think all of those aspects make it worth considering in May.
âBest Buys Nowâ Pick #2:
Redacted
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Foolâs board of directors. Mark Rogers has no position in any of the shares mentioned. Ian Pierce owns shares of Alphabet. The Motley Fool UK has recommended Alphabet. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.