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2 Stocks That Top Managers Are Buying

Our Ultimate Stock-Pickers made sizable investments in these names last quarter.

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Each quarter, we take a look at the recent transactions of some of the top money managers around today--who we call our Ultimate Stock-Pickers. Last quarter, two stocks were high-conviction purchases for a dozen of our favorite managers. What's considered a high-conviction purchase? A high-conviction purchase is one that makes a meaningful addition to a portfolio, as measured by the size of the purchase in relation to the size of the portfolio.

First up is Alphabet GOOGL. We recently increased our fair value estimate on Alphabet by about 9%. Alphabet beat expectations with its second-quarter results. The company enjoyed an impressive increase in search ad revenue, and YouTube saw continuing growth in its advertising and subscription revenue. What do we expect from Alphabet going forward? We think Alphabet's cash flow will continue to grow, because we're confident that Google will maintain its leadership in the search market. We also expect YouTube to contribute more to Alphabet's top and bottom lines. We assign Alphabet a wide economic moat rating and think shares are worth $3,200 each.

Morningstar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.