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Topic: Growth Stocks

ALPHABET INC. $741, $760

ALPHABET INC. (Nasdaq symbols GOOG $741 [class C: non-voting] and GOOGL $760 [class A: one vote per share]; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 688.3 million; Market cap: $517.8 billion; Price-to-sales ratio: 6.8; No dividends paid; TSINetwork Rating: Above Average; www.abc.xyz) is the new holding company for Google’s Internet search business and its smaller, riskier operations. These smaller businesses, which it calls “Other Bets,” offer home thermostats and high-speed Internet and digital TV services.

Among these Other Bets is Boston Dynamics, a firm developing advanced robotic technologies. Alphabet purchased this company in 2013. However, developing commercially viable robots is taking much longer than Alphabet anticipated. As a result, the company is now planning to sell Boston Dynamics.

While the sale will have little impact on Alphabet’s overall revenue and earnings, it illustrates the benefits of the company’s reorganization. It also shows its dedication to developing profitable new businesses.

Meanwhile, Alphabet’s Google subsidiary has agreed to expand the availability of Wi-Fi and high-speed Internet services in Cuba. Just 5% of Cubans have Internet access, so this could be a big growth opportunity.

Alphabet is our top Aggressive buy for 2016. For new buying, we recommend the cheaper class C shares.

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