I have been looking for shares to buy for my portfolio in the coming weeks. Recent market volatility means I think some shares offer me better value now than they did before. Here are two that have caught my eye.
Alphabet
Shares in US tech giant Alphabet (NASDAQ: GOOG) have fallen 23% over the past year and now trade on a price-to-earnings ratio of 21.
But while the share price may have been moving downwards, I think Alphabet’s future prospects get better and better over time. Its Google search engine is so widely used that it is is almost a license to print money. Other parts of the business like YouTube are also incredibly popular. The company’s installed customer base and technical expertise gives it a massive competitive advantage as it makes it hard for rivals to lure users away. That gives Alphabet pricing power.
Even if it invested no more in its business and let it stand still, I think Alphabet could produce huge profits for years to come. But it is investing in growing its business, which makes it more attractive to me as a long-term investor. Last year’s record profit of $76bn, for example, was far ahead of the $40bn Alphabet had earned in the prior 12 months.
There are risks that come with success on such a big scale. Regulators may try to break the company up, or take some of its earnings by imposing large fines on it. Alphabet works in a range of very complex regulatory regimes. But the long-term story here is compelling. I would be happy to buy Alphabet shares now and hold them for the coming decade.
boohoo
If Alphabet shares have had a hard year, their poor performance pales in comparison to online retailer boohoo (LSE: BOO). The fashion merchant has seen its share price collapse 84% in the past year. I have bought in, only to watch the shares fall even further.
So why do I still see these as shares to buy now for my portfolio given that background? In short, I think the underlying business here has attractive characteristics. People need clothes, more and more shoppers like to buy them digitally, and boohoo has developed a competitive cost model that could stand it in good stead during economically tough times.
The company has proven in the past that it can be very profitable. It continues to scale up operations in the US and I expect in years to come the international footprint could be a significant driver for further profits. Meanwhile, there are definitely challenges. boohoo’s emphasis on competitive pricing can mean inflation poses more of a risk to profits in coming years than it does at rivals that can pass it on to customers more easily.
But its business model has been proven in the past, it has a strong collection of brands and I think the market space in which it operates has substantial space for further growth. I continue to see boohoo as shares to buy for my portfolio this month.