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CREDIT SUISSE: Alphabet is our No. 1 internet stock pick (GOOGL, FB, AMZN)

Stephen Ju covers Alphabet for Credit Suisse and explains why it's the bank's number one stock pick.

Google's parent company Alphabet could be worth $1,100 a share, nearly one-third more than it's trading for, Credit Suisse analysts said in a note to clients on April 17.Credit Suisse named Alphabet one of its three favorite consumer Internet stocks. Facebook, and Amazon are the other two top large-cap consumer internet stocks to own, the bank says.

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Stephen Ju covers Alphabet for Credit Suisse and explained that it's the bank's number one pick because he thinks the company will do better than investors currently expect in a few key areas. These are:

Even though Google Search can overshadow all other aspects of Alphabet's business, Credit Suisse says that as Google search matures, other faster-growing Alphabet subsidiaries such as YouTube, Google Play, and Google Cloud will grow and make up one-third of Alphabet's business within three years.

Alphabet is Credit Suisse's favorite internet stock because it has been underperforming its peers since the beginning of 2016. Also, it trades at about 16 times Credit Suisse's 2018 non-GAAP EPS estimate, way behind Facebook at 25 and Amazon at 55 times.

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The bank noted some risks to its bullish view. They include the slower-than-expected adoption of Google's new ad units, or a loss of market share of non-Android smartphones.

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