Susan Dziubinski: Each quarter, we take a look at the top holdings of some of the best money managers around today--who we call our Ultimate Stock-Pickers. Today, we're focusing on the three top holdings among this group of fine investors.
First up: Apple AAPL. Apple adeptly packages hardware, software, services, and third-party applications into sleek, intuitive, and appealing devices. That allows the firm to charge a premium price for its hardware, unlike most of its peers. As such, we think Apple has carved out a narrow economic moat.
Stocks with economic moats have durable advantages that should allow them to fight off competition.
Although we think the company's recent stretch of double-digit revenue growth will be difficult to maintain, we remain positive on Apple's ability to extract sales from its base through new products and services.
Next is Microsoft MSFT.
Microsoft has transitioned from a traditional perpetual license model to a subscription model. Today's Microsoft is a cloud leader that can deliver a wide variety of solutions at scale. The company is focused and offers impressive revenue growth with high and expanding margins. We think Microsoft has carved out a wide economic moat.
We assign shares a $352 fair value estimate.
Morningstar's fair value estimate represents the long-term intrinsic value of a stock, based on how much cash we think the company will generate in the future.
And lastly, there's Alphabet GOOGL. Alphabet dominates the online search market with Google's global share above 80%, generating strong revenue growth and cash flow. We remain confident that Google will maintain its leadership in the search market. Google recently announced that it's acquiring Mandiant, which will enhance its cybersecurity offerings. We think YouTube will contribute more to the firm's top and bottom lines, as well. We think Alphabet has a wide economic moat, and that shares are worth $3,600 apiece.
Strategist Abhinav Davuluri, senior analysts Eric Compton, Ali Mogharabi, and Dan Romanoff, and associate analyst Justin Pan provided the research behind this segment.