Investing Online Like a Pro for Q4 2017 – 3 Stocks to Look at According to Forbes
2017’s 4th quarter has just kicked off and with it the usual slew of QX stock picking tips have come out. Any online stock market investor knows that stock tips should be treated with a healthy degree of caution and never be taken at face value. Applying your usual assessment criteria is a must. Nonetheless, they can contain some winners and can be a great source of ideas for companies to look at in more detail as potential investments to add to a stock market portfolio.
It’s been a stellar year for equities markets so far as they just seem to keep rising. That should of course prompt caution but for now things look relatively healthy heading into 2017’s final straight. Forbes was among the financial media to publish their own Q4 stock tips to kick October off, so which companies did the online magazine pick out and why?
First up among the picks is Google owner Alphabet. While the internet and technology juggernaut’s share price has grown impressively since it floated in 2004, up from $50 (split adjusted) to $900 this year, the Forbes article argues the way the company is developing means there is still plenty of room for growth. Alphabet, or Google as it was known until recently, has up until now been a primarily online search and advertising play, with most of the company’s profits coming from that side of the business.
However, Alphabet now has subsidiaries which are all leaders in their field in high growth areas expected to be extremely profitable in coming years: mobile software (Android), online video (YouTube), smart homes (Nest), self-driving cars (Waymo), artificial intelligence Deepmind), and online mapping (Google Maps). Up until now, Alphabet has mainly been a net investor in these businesses but should start to reap the rewards in coming years. YouTube alone has a valuation put by some at up to $80 billion, much higher than Netflix.
Despite recent high share price growth Alphabet trades at less than 24 times next year’s expected earnings, which leaves room for growth for a company that is highly profitable and consistently shows double-digit growth. The company is also sitting on a cash pile of $9 billion so is likely to take advantage of any future stock market sell-offs by preying on bargains and swallowing up other companies at attractive prices when the time is right.
While Alphabet is a growth stock tip, Forbes’ next idea is a value pick. ArcelorMittal is the world’s largest steelmaker but has had its issues in recent years. However, a successful deleveraging strategy over the past couple of years and rising steel prices as China cuts back production in an attempt to help the country’s pollution problems mean that Forbes thinks the company could now be a bargain.
The steelmaker’s share price is currently much cheaper than its historical average, changing hands at a multiple of ten to forward earnings against a five-year average of nearly times sixteen despite the company currently outperforming its industry. ArcelorMittal also recently announced a $1 billion investment in Mexico aimed at taking advantage of growing steel demand from the central American country and is said to be planning a buy-out of Italian competitor Ilva S.p.A.
Finally, the third Forbes tip is Warren Buffet’s Berkshire Hathaway as the shares are currently trading at a price-to-earnings ratio of 21, a discount to the market. The company is currently being rated as a ‘hold’ by most analysts who feel its current trading price of around 25 times forecast 2017 operating earnings-per-share is fair value in the context of the average multiple of 19 for peers. However, with the company currently sitting on a mammoth $91 billion cash pile, big acquisitions could soon see Berkshire Hathaway motoring again and now might be the time to make the most of future upside for investors willing to take a risk on Buffet’s track record.
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