Why Isn’t Warren Buffett Buying Alphabet (Google) Stock Hand Over … – The Motley Fool
What does Warren Buffett like in a stock? You could put a solid business moat high on the list. High returns on invested capital (ROIC) would be up there, too, as would an outstanding management team. And we can’t leave out an attractive valuation.
Google parent Alphabet (GOOG 0.69%) (GOOGL 0.63%) checks off all of those boxes and dominates its core search market. It’s a strong challenger in others, as well, notably including cloud hosting. Alphabet’s ROIC consistently trounces the levels generated by Buffett’s own Berkshire Hathaway. The company’s CEO Sundar Pichai has an exceptional track record.
Then there’s valuation. Alphabet stock has plunged nearly 40% year to date. It has never been this cheap, based on its projected future free cash flow. So why isn’t Buffett buying Alphabet stock hand over fist?
Buffett’s initial hesitation
There were several reasons why Buffett didn’t initially buy what was then Google stock. Most importantly, he didn’t think the company’s business was…
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