UBS Makes Big Change to Quality at a Reasonable Price Portfolio

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Alphabet

The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) provides online advertising services in the United States, the United Kingdom and rest of the world. It offers performance and brand advertising services, and it operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.

The Google segment also sells hardware products, comprising Chromecast, Chromebooks and Nexus. The Other Bets segment includes businesses such as Access/Google Fiber, Calico, Nest, Verily, GV, Google Capital, X and other initiatives.

The company has an impressive market capitalization of $532.4 billion. The consensus price target is posted at $940.91. The shares closed the day on Wednesday at $789.85.

Facebook

The huge social media leader posted gigantic quarterly numbers that truly blew most of Wall Street away. Facebook Inc. (NASDAQ: FB) operates as a mobile application and website that enables people to connect, share, discover and communicate each other on mobile devices and personal computers worldwide.

Its solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application for mobile and web on various platforms and devices, which enable people to reach others instantly, as well as enable businesses to engage with customers; and WhatsApp Messenger, a mobile messaging application.

Facebook also develops Oculus virtual reality technology and content platform, which allows people to enter an immersive and interactive environment to play games, consume content and connect with others. As of December 31, 2015, it had 1.04 billion daily active users (DAUs) and 934 million DAUs who accessed Facebook from a mobile device. Most Wall Street analysts point to the fact that Facebook remains the top beneficiary of the adoption of mobile internet trends with total U.S. internet time spent on Facebook and Messenger.

Facebook has grown to an astounding $360.1 billion market cap in less than five years. The UBS price objective is $155, and the consensus target is $153.71. Shares closed Wednesday at $126.12.

Red Hat

This top technology stock is the last of the pure tech names in the Q-GARP portfolio. Red Hat Inc. (NYSE: RHT) is the world’s leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training and consulting services.

Last year the company formed a partnership with once bitter rival Microsoft that would bring more flexibility to hybrid cloud enterprise environments. Specifically, the partnership allows cloud products running under the Linux operating system to integrate with Microsoft’s cloud computing platform Azure, a huge move after years of competition.

The $85 UBS price target compares to the slightly higher consensus target of $87.71. The stock closed the day Wednesday at $72.98.

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The technology stocks that land in the Q-GARP portfolio generally make sense for growth stock portfolios, as they are all leaders in their segments and not wildly overbought and priced.