Our goal here at the Motley Fool is: To help the world invest. Better.
In that spirit, we're devoting a large portion of our time this September to letting the world know what it means to invest. Financial literacy isn't one of our country's strong suits, and we'd like to do what we can to change that.
The goal of this series has been to slowly expose readers to stocks we like, and some that we don’t.
But today, I’ve saved the best for last: the most diversely recommended stock in the Fool Universe.
Can you guess what it is?
One of the things that makes this stock so intriguing is its combination of simplicity and diverse appeal. Surely, the vast majority of the world knows this company, but consider the wide range of investing styles that it fits into:
- Our Inside Value newsletter, which tends to focus less on growth, and more on fundamentals that aren’t being appreciated by the market, has this as a Core holding.
- Our Rule Breakers newsletter, which some might see as the antithesis of value investing, also has this stock listed as one of its Core holdings.
- Additionally, the stock is held by our real-money Alpha, Supernova, and Million Dollar Portfolio services.
Take a second, and see if you can guess which company is so strong, so innovative, with such a sustainable competitive advantage it that it should be dominating for years.
Were you right?
I wouldn’t blame you for thinking that this company was Apple (Nasdaq: AAPL ) , but some would argue that the company’s advantage is innovation. Although the company certainly has that, innovation alone isn’t a sustainable competitive advantage.
I also wouldn’t blame you for thinking that it's Amazon (Nasdaq: AMZN ) -- the one stock that I think every investor should have. But too many people think that a company trading for over 300 times earnings is a little too risky.
No, this company is so ubiquitous that its name has been turned into a verb, and its website is the most oft-visited in the world. That company, dear Fools, is Google (Nasdaq: GOOG ) .
Some investors might be asking now why this behemoth is such a tempting buy. Well, for starters, let’s consider the simple fact that because it’s the default search engine of most of the world’s Internet users, it has built an enormous moat for itself.
Throw in there the fact that Internet usage is growing worldwide, and you start to get a taste for the opportunity out there -- even if the company has all but ceded much of the Chinese market to Baidu (Nasdaq: BIDU ) .
Then throw in the fact that it's spreading its services -- focusing on a mobile operating system (Android) that's the most popular in the world, and will increase traffic to its site, offering up free e-mail (Gmail), and a video-sharing site that currently ranks third in the world (YouTube).
Add to that the fact that it is being spearheaded by a set of -- in my opinion -- principled leaders who will be calling the shots for years to come, and you see why our services have recommended the stock so many times.
But there’s one more thing…
Obviously, all that I’ve stated above is more than enough for me to get excited about the Big G. But we haven’t even looked at the price.
Over the last five years, Google has increased revenue by about 21% per year, and that growth has been accelerating. Over the same time frame, earnings have been taking a 23% jump per year.
The earnings growth is actually decelerating, but I’m not worried, because this is largely due to the fact that CEO Larry Page, and co-founder Sergey Brin, are investing in the company’s future.
Since 2009, the company has grown earnings significantly, yet seen its price-to-earnings ratio shrink.
Today, Google trades at 20 times earnings, and about 18 times free cash flow. That’s more than fair for such a quality company.
Better yet, if you'd like to continue using the Fool as a source to better your knowledge of the financial world, jump over to our special page, InvestBetterDay.com. On Sept. 25, we're taking a day to celebrate the art of investing, and we encourage your participation. Jump on over to the site now to continue your own personal investing voyage.