Alphabet shares: a once-in-a-decade opportunity to outdo Warren Buffett

Chances of beating Warren Buffett don’t come very often. At Berkshire Hathaway The CEO is one of the most patient, disciplined and cautious investors.

The results speak for themselves, but even the best investors sometimes make mistakes. According to Buffett, one of his regrets is not buying stocks Alphabet (NASDAQ:GOOG).

I think now is a once-in-a-decade opportunity to avoid making the same mistake. That is why I have bought shares this month.

A missed opportunity

One of the keys to Buffett’s investment success is avoiding obstacles. This has worked well, but the downside is that it can lead to lost opportunities.

One famous example is Google. Over the past 10 years, shares in Google’s parent company Alphabet have increased by an average of 13.7% per year.

In 2019, Buffett and Munger told Berkshire Hathaway shareholders that they should buy shares in Alphabet. He said not doing so was his mistake.

He has first-hand experience of Alphabet’s advertising platform, having used it in his own operations. Two things are surprising.

The first is the high margin it commands. The business generates revenue on a per-click basis for something that has close to zero additional costs.

Second, the service is rarely useful to customers. Google Ads allow businesses to reach a large audience.

Despite this, Buffett and Munger never bought the stock.

the price is lower

Alphabet still has high margins and a dominant position in its industry. And I think there is an opportunity for me now that only comes once in a decade.

Shares have fallen about 37% over the past 12 months. But that’s not why I believe there’s a historic opportunity here.

At current prices, the stock is currently trading at a price-to-earnings (P/E) ratio of 17.5. The lowest in 10 years.

The average P/E ratio of Alphabet shares since 2012 is 25. Even during the pandemic, they have consistently traded at a P/E ratio of 20 or higher.

So relative to the company’s earnings, Alphabet’s stock has never been lower in the past 10 years than it is today. That’s why I think there’s a rare opportunity here.

Stocks to buy

I have Alphabet shares in my Stocks and Shares ISA. And I have increased my investment this month.

The size of the alphabet means it cannot grow as fast as it has historically. This is the main risk with this type of stock.

But the main features that make it a great business are still there. And the price is clearly attractive.

I took the opportunity to avoid one of Buffett’s investment mistakes. This doesn’t come around often, so I jumped at the chance now.