Google vs Amazon

The the battle commence…

I’m torn between the two… where would you put your money and why?

Amazon overvalued? Google safe bet?

My Portfolio Breakdown
Tech - 56.2%

  • Microsoft
  • Amd
  • Intel

Other - 26.8%

  • Cash (doing nothing for me at mo)

Entertainment - 9.2%

  • Disney

Finance - 7.8%

  • Mastercard

On reflection I’m heavy on tech companies… but at the same time these have not been that volatile compared to other sectors.

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That’s a tough one, I think either way they’re both relatively safe bets.

I remember a few years ago when Amazon were at about $1,000 everyone thought it was crazy to invest in them at that price but look at it now. Amazon seem to be trying their hand at everything and they have the money to do so. I’m unsure where the ceiling would be on their stock price but I personally can’t see it going down considerably anytime soon.

Google I see in a similar sort of light. I dont think they’re ever going to stop innovating or adapting and although they have plenty of failed products, their successful products far outweigh those negatives.

Personally I’m not invested in either and I dont plan on it anytime soon. I think they’re both great companies but I like a little more risk to play around with :wink:

My portfolio at the moment has quite a few tech stocks, more focused around those that I think are benefited by the current remote working environment. I’ve also had a muck around in the travel industry and have done quite well in a few US airlines as well as hotels and uk based Trainline/National Espress.

I generally like to invest in the companies I use, like and believe in. It may not be the best method in terms of investment research… but I’ve always done well by following the companies I use in my daily life or at least am interested to read about.

Many of these companies have lost 80% of their share price in the last few months and I truly believe in time they will bounce back so I’m on board for the ride :wink:

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Hey @vekariya17,

I would go with Google right now, but agree with Mitch that in the long run they’re both well positioned to grow further.

You can find the rationale for why google vs. amazon right now in this weekend’s What’s Going On newsletter where I have covered the digital economy / software focus outperforming those with real world footprints.

I feel like there’s more pain to come for Amazon relative to Google - although relative to the rest of the market both of these companies will probably feel comparatively insignificant amounts of pain!

That said, please do your own research before making a final decision as the above is just intended to give you some food for thought - and not investment advice!

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I ended up going with Alphabet this afternoon prior to seeing this, so happy you said HarshP :slight_smile:

As Mitch said he has his own way to pick out investment methods, my methods of investment research is also far from the traditional way of just looking at the various key metrics.

It ultimately came down to which is likely to have more struggles in terms of operations so i decided with Google.

HarshP no problems about the investment advice! I just like to get others peoples views and reasoning to make a further informed decision.

I will however ask - If you had to pick a handful of Metrics based on the following type of stock (best fit), what would they be?

Growth Stock

Bluechip Sock.

Dividend Stock.

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Hey @vekariya17

Glad to hear and sounds like you have your own line of reasoning which is good.

With regards to metrics - I would caveat by saying they are only part of the story - the other parts include assessing the overall situation in financial markets and looking at a company’s strategy / management effectiveness.

Also, when you look at metrics for analysis is to make sure you look at the numbers which are most relevant for a company, and this can be subjective in some cases - it’s ultimately down to you as the investor to decide what is most relevant.

That said, here are the metrics that come to mind when thinking about the stock types you provided:

Growth:
Market based: 1Y forward P/E, 1Y forward P/S, Gross margins, PEG
KPI / Company based: Total Addressable Market, User / subscriber / customer growth rates, other company specific KPIs which you can find in their quarterly earnings presentations - these can vary a lot depending on the company’s business model and industry in which it operates.

Dividend:
Market based: 1Y forward dividend yield, Free Cash Flow yield, net margins, and either P/E, EV/EBITDA, EV/EBIT or another multiple which may be the most relevant depending on the type of business you’re looking at.
Company / KPI based: Leverage (net debt / EBITDA), interest coverage (EBITDA / interest coverage) and other company specific KPIs as mentioned in the growth stock section above.

Bluechip can be either more of a growth stock or more of a dividend stock - to me it doesn’t make as much sense to compare bluechip to growth and dividend stocks for this reason, so I would use the relevant metrics from the growth / dividend list above!

A sidenote on bluechips and dividend cuts: right now a lot of blue chip companies which aren’t growth stocks are suspending their dividends (Shell last week was an example) - this takes away the biggest reason to own a lot of these names (the dividend), which is one of the main reasons why you’ll probably see them lagging the broader equity markets in terms of performance. From a demand / supply perspective, a lot of dividend funds own these dividend stocks - if the company suspends its dividend payments, those funds are forced to sell their holdings of the stocks - this is why you see a big jump lower in share price as soon as dividend cuts are announced. Again looking at Shell - it was trading at £14.57 before announcing the dividend cut and is now trading at around £12.60 or 13% lower a few days later.

A final thing to remember is that you can apply the market based metrics as a first step in your investment screening process but then you should dig into the company itself and get a sense for how they are performing according to their own KPIs + assess the likelihood that they will do better or worse than their own KPI targets as a way to determine whether the share price is likely to outperform or underperform.

If you have a read through the stock investing framework, a lot of the above is covered in a more generalised sense - some of the parts of the framework are more relevant than others depending on the company you are looking at, but overall if you run through it as a checklist consistently, it may help you to cover your bases when it comes to investment decision making + over time get a good sense for the broader stock market / become quicker at spotting potential issues or positives when looking at a stock.

Hope that helps, let me know if you have any more questions!

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@vekariya17, keen to hear why you choose Disney over Netflix?

I’m holding Microsoft, Mastercard, Alphabet and Amazon among others - Amazon was recently approved by the FCA to buy a stake in Deliveroo, so I’m keen to see how they master the food delivery space like they’ve done with their shift into other segments.

Definitely agree that Alphabet should see less challenges, but Amazon has a great track record of exceeding expectations - 134K% growth in 10 years is an impressive track record if you’re after capital growth.

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Hey Steph,

I should ask which brokerage platform are you are using to hold those companies :stuck_out_tongue:

I think the decision why I picked Disney over Netflix came down to overall just being a fan of the brand and them having various revenue streams (theme parks, stores, toys etc) … as mentioned before I don’t tend to pick companies based purely on key metrics, but not to say this isn’t something that I will include in my decision making.

Microsoft - I just looked at the YOY growth, they just keep innovating. I think they will be quick to adapt to AI when its ready.

AMD - gaming is going to be huge and Covid has fast tracked this, I think out of the two companies AMD they seem to be the more popular brand, so I have a larger holding of AMD vs Intel.

Mastercard - All these Fintech start up banks tend to go with Mastercard over Visa, so I picked them not sure if in general they are better at integrating with other technologies… plus I invested in Monzo :wink: who use Mastercard.

I believe that we will end up with a cashless society…eventually when our ‘old school’ people are longer with us :upside_down_face: and as other countries catch up.

I would hope Mastercard will eventually just bring out a crypto currency of their own.

Alphabet - I used to do SEO before, so maybe it has had a subconscious impact on the decision, but as you said its operationally it has less challenges. We all know people are shopping online more, whats to stop Google opening a service to offer free online listing of small business stores. Plus i had such a awful experience with amazon fulfilment and I felt they are overvalued.

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@vekariya17 :stuck_out_tongue: multiple platforms, as there are none quite like Evarvest :wink: Definitely looking forward to our launch so I can consolidate - and reduce my costs!

I was buying into some ASX stocks like Hearts & Minds, A2 etc last week, and using my bank’s platform again just re-affirmed the huge pain point that led to Evarvest’s creation! - I’m definitely pushing for us to add the ASX into our app soon after launch. We already have access to it, and I’ve got my eye on a few stocks :heart_eyes:

Same with the LSE, it’s incredibly expensive to access from Australia - really any exchange outside Australia and the US are. At $200 per trade in brokerage, it’s really not worth it.

Definitely agree with your take on the stock picks - I’m holding them for largely the same reasons, but I haven’t invested in Disney yet. As much as Disney land is pretty amazing and Disney has made a lot of the classics from our childhood, I’m a big fan of Netflix as a user. But also their ability to capture the two largest demographics of the population (older Gen Z and Millennials) along with other generations - highly recommend reading the book ‘That will never work’ by the founder of Netflix. It’s a great read even if you’re not investing in them.

Interesting point with Google! - they’ve dropped their price on their Zoom like product as well, so it will be interesting to see how they develop over the years. Agreed re Amazon. I think they’re impressive, but can appreciate the experience you’ve had. I’m not a fan of their streaming services either, it’s overvalued in my opinion. But Amazon is doing well with AWS and their acquisitions into other industries.

Completely agree on the cashless societies point - ATM installations have been dropping internationally for a couple of years now, which further demonstrates the lack of demand for cash. Interesting to see if Mastercard would eventually offer their own crypto currency. It would make a lot of sense as they are effectively a traditional version of what blockchain is (a platform validating transaction). Last I checked, Mastercard could validate significantly more transactions in the same time compared with the blockchain Bitcoin operates on.

I haven’t got into gaming yet, but I see the trend growing. I’m waiting to access the WSE to buy CD Projekt - I think they’ve done well in aligning with US companies.

Ps. Monzo is have done a great job in balancing the seriousness of a banking product with keeping it engaging. Their marketing is also on point with the problem they’re solving, and is very entertaining - I’ve just started testing their service as a user, and by comparison to Revolut, I can see why Monzo has more user trust. Their onboarding and approach does keep an element of seriousness that gives me confidence as a user that my funds are safe.

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