Alphabet (GOOGL): Why Investors Think This Stock Is A Buy Now

4:08 pm ET, 26 Mar 2018

The similarity of Google’s and Facebook's business models, fueled by Facebook’s data leak, resulted in a dip for Alphabet’s stock price (NASDAQ: GOOGL) earlier last week. Both companies obtain the majority of their revenue from advertising. The impact is likely to continue until Facebook is completely cleared from the data leak scandal dating back three years.

Data is the driving factor behind IT companies such as Google, and cybersecurity breaches are at all-time high. The perceived lack of data integrity has affected investors’ sentiment about the advertising giants. 

However, the Facebook data breach is likely to be a temporary occurrence only.  Both Google and Facebook have a solid data governance model.  So now may be a good opportunity to buy these stocks at relatively low prices.

Google dominates mobile OS ecosystem.  More than 60% of the US and 80% of the global mobile OS market share is tied to Alphabet. 

Google’s core products are going strong.  Some core products and services that are doing well are YouTube, Gmail, Google Play, Pixel phones, and Google Cloud.

The Waymo subsidiary of Alphabet rules the autonomous vehicles sector. Waymo has also become one of the leading AI companies.

On the negative side, Google is facing tough competition from rivals like Amazon, particularly now that Amazon is gaining speed in the advertising space.  

Per Finstead Research, Google’s average price target is almost $1283.  Its price upside is 25% (just visit Finstead.com and type “Google price upside”).

Google has a fairly high valuation with respect to its peers. Its P/E ratio only lags that of YNDX and TWTR.


Shopify: Can The Stock Move Higher?

1:25 pm ET, 26 Mar 2018

There has been a 700% rise in Shopify’s stock (NYSE: SHOP) price since 2015.   But what is the stock price prediction?

Shopify's "Facebook problem"--its dependence on getting the data from the social networking site--had caused a dip in its stock price recently.

The Ottawa-based company enables smaller merchants to compete with huge retailers such as Amazon.com by providing them with tools and websites to run their operations.

Google inked a deal with Shopify to assist it in hosting its online e-commerce stores. The hosting will be done on Google's Infrastructure-as-a-Service.   This is a shrewd strategic move by the search engine giant in its attempt to compete with Amazon. 

A few other major retailers besides Shopify have switched from the rival’s Amazon Web Services to Google Public Cloud or Microsoft Azure.

Shopify's focus on the SMB segment, which is prone to headwinds in the retail sector makes it risky to buy the stock now.

Per Finstead Research , Shopify’s average price target is almost $145 which is comparable to its current price (visit Finstead.com and type "Shopify price target").  


Shopify’s valuation is the highest among its peers.

Our simple thought on Shopify is, hold for now.  It may be too risky to jump in at this point.

FAANG Pullback Inevitable in 2018?

7:09 am ET, 02 Jan 2018

FAANG

As you're entering 2018, you may be wondering which stocks that you own in your portfolio are bound for a 'correction' in 2018.  

The scale of the FAANG rally in 2017  has led some investors to believe that this group has been overdone as an investing theme, especially given signs of overvaluation. 

Facebook, Amazon, and Netflix were up more than 50% over the last 12 months; Apple's gain was over 50%, and Google 'trailed behind' with 30%+ annual stock price growth.

And the FAANG stocks weren’t just market leaders this year; they accounted for a sizable portion of Wall Street’s overall move higher. 

How do the analysts feel about these stocks?  Morgan Stanley said it is still positive on the group, but macro factors could be concerning.  History indicates that returns may moderate their pace and Morgan Stanley analysts question whether growth can be sustained in the upcoming period.  

Apple investors should be especially worried about the $1,000 price tag on the iPhone X that may cut into first-quarter demand.

The group may be less well-insulated from cyclical pressures that many investors anticipate will increase over the next couple of years.  These stocks are tied to the cycle via advertising and consumer spending.

Here is a look-back on Facebook and Amazon stock performance.  Over the last year, FB returned +52.54%. This return is higher than Internet Information Providers sector (42.56%), Technology industry (26.77%), S&P 500 (18.87%) returns.

Over the last year, AMZN returned +52.98%. This return is higher than Catalog & Mail Order Houses sector (20.39%), Services industry (4.74%), S&P 500 (18.87%) returns.

Alphabet Inc. (GOOG) Stock Guide

Updated at: 10:51 pm ET, 17 Sep 2020

Before we start: if you're looking for GOOG stock price, you can quickly find it out by visiting Finny and typing "GOOG quote". If you're looking for a quick scoop on GOOG stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "GOOG". You'll get all this info in one place. Or you can just type "GOOG news" to get the latest stock news.

Looking to buy or sell Alphabet Inc. (GOOG)? Interested in getting the full scoop on GOOG, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this GOOG stock guide, we'll address key questions about GOOG, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are GOOG earnings?
2. What is GOOG stock forecast (i.e., prediction)?
3. GOOG buy or sell? What is GOOG Finny Score?
4. What are the reasons to buy GOOG? Why should I buy GOOG stock?
5. What are the reasons to sell GOOG? Why should I sell GOOG stock?
6. What are GOOG key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are GOOG earnings?

GOOG trailing 12-month earnings per share (EPS) is $45.49.

Analyst Predictions

2. What is GOOG stock forecast (i.e., prediction)?

Based on GOOG analyst price targets, GOOG stock forecast is $1,698.85 (for a year from now). That means the average analyst price target for GOOG stock is $1,698.85. The prediction is based on 5 analyst estimates.

The low price target for GOOG is $1,420.00, while the high price target is $1,975.00.

GOOG analyst rating is Buy.

Analysis

3. GOOG buy or sell? What is GOOG Finny Score?

#{finnyScore:60}Our quantitative analysis shows 3 reasons to buy and 2 reasons to sell GOOG, resulting in Finny Score of 60.

4. What are the reasons to buy GOOG? Why should I buy GOOG stock?

Here are the reasons to buy GOOG stock:

  • As the number of online users and usage increases, so will digital ad spending, of which Google will remain one of the main beneficiaries.
  • Android’s dominant global market share of smartphones leaves Alphabet’s Google well positioned to continue generating top-line growth as search traffic shifts from desktop to mobile.
  • The significant cash generated from the Google search business allows Alphabet to remain focused on innovation and the long-term growth opportunities that new areas present.
  • Alphabet is showing increased appetite in the Home Assistant space. The company made its foray into this market in October 2016 with the launch of Google Home. Google Home performs an array of tasks such as playing music, reading books, managing calendars, answering queries, searching places, calling over cabs, controlling smart home devices and so on.
  • Alphabet focuses on innovation, launching products and services for multiple industries. The development and enhancements of its search technology over time has created win-win situations wherein buyers, sellers and the public at large were benefited. The success of this strategy led to very strong growth since inception.
  • Google has been growing rapidly in this fast-growing highly-competitive cloud market. The company has signed many partnerships and has been opening data centers to extend its cloud footprint worldwide.
  • The company’s history of execution is unparalleled. Alphabet has made significant investments to diversify its revenues, but still managed strong double-digit growth, which is indicative of good management execution. The strength in the core search business was supported by the successful integration of major acquisitions (AdMob, DoubleClick, YouTube, ITA and Nest to name a few), which provided it with the technology for sustained growth in the highly dynamic and competitive markets in which it operates.
  • Although the desktop was the most popular computing device in the past, mobile search is now equally if not more popular. That is because there is a growing tendency among users to look for information at the exact time the need arises. The plethora of mobile Internet devices that are making their way to the market is making it easier on the device front.
  • Alphabet has a number of mobile initiatives. First, it is leveraging its Android OS not just to build search market share but also to drive sales of apps and digital products through Google Play. The company continues to bring improvements with each version of the OS, at the same time spurring app development.
  • Online and mobile video consumption is soaring and Alphabet remains strongly positioned here with the YouTube platform. In its race to target TV ad dollars, Alphabet allowed third-party (Nielsen and comScore) tagging of YouTube videos to determine the effectiveness of ads on YouTube versus ads shown on TV. The Google Preferred program pulls out the top 5% of the most engaging content on YouTube for advertisers.
  • Alphabet has increased focus on the online payments segment. The first phones incorporating Near Field Communication (“NFC”) technology were introduced quite some time back, but adoption was slow because it required retailers to invest in new terminals and because ISIS (the payments service created by wireless carriers) stood in the way. But Alphabet has since struck a deal with carriers, bought out most of the ISIS technology, and even acquired distribution rights for last-mile access in some cases.
  • Alphabet is clearly getting more serious about ecommerce opportunities in an attempt to diversify away from the increasingly competitive search market. For search advertising to be effective, Alphabet needs to track certain user activity, which it does through cookies (programs installed on user devices) or when users agree to share location with the Maps app.
  • Another area of diversification that is likely to gain traction over the next few years is Android Auto. This is a technology that projects the user’s Android phone (Lollipop version or later) onto a car’s dashboard enabling the use of Alphabet technology like Google Now and access to Maps, directions, music and other apps on the phone just by placing the phone in the allotted space. The phone also charges automatically.
  • GOOG average analyst rating is Buy. See GOOG analyst rating chart.
  • GOOG average analyst price target ($1698.85) is above its current price ($1495.53). See GOOG price target chart.
  • GOOG cash to debt ratio is 7.50, higher than the average industry (0.17) and sector (0.17) cash to debt ratio. See GOOG cash to debt chart.

5. What are the reasons to sell GOOG? Why should I sell GOOG stock?

Let's look at the reasons to sell GOOG stock (i.e., the bear case):

  • There is little revenue diversification within Alphabet, as it remains heavily dependent on Google and the state of the search ad space.
  • Alphabet is allocating too much capital toward high-risk bets, which face a very low probability of generating returns.
  • Google’s dominant position in online search is not sustainable, as more companies and regulatory agencies are contesting the methods through which the company has been extending its leadership.
  • Alphabet faces significant litigation all over the world as a result of its dominant position in search. Regulatory scrutiny continues to worsen with the competition commission issuing several statements of objections (which precedes judicial proceedings unless settled).
  • There are also some other margin pressures: foreign currency impact, fast-paced international growth, and a growing volume of lower-priced YouTube clicks.
  • Google's Android Pay, an NFC-enabled payment system for transaction processing at a large number of retailers, faces significant competition at the moment from Apple Pay and rival payment systems: PayPal, Amazon, Samsung, Square, etc.
  • Alphabet has made numerous attempts to build a position in the social segment. This is because social networking through websites, such as Facebook and Twitter are places where people are sharing a lot of personal information and preferences that may be used to develop more customized results and thereby enable better targeting of advertisements. The fact that people are spending more time on social networks means that they are spending less time on the browser.
  • The company is likely to see an increased amount of competition from Facebook for digital advertising dollars. The social network has already taken the lead in display ads and has now doubled down on video.
  • GOOG quarterly revenue growth was -1.70%, lower than the industry and sector average revenue growth (1.28% and 0.89%, respectively). See GOOG revenue growth chart.
  • GOOG profitability is declining. The YoY profit margin change was -10.15 percentage points. See GOOG profitability chart.

Key Stats

6. What are GOOG key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for GOOG:

Metrics GOOG
Price $1,443.58
Average Price Target / Upside $1,698.85 / 17.68%
Average Analyst Rating Buy
Forward Dividend Yield 0.00%
Industry Internet Content & Information
Sector Technology
Number of Employees 98,771
Market Cap $1,127.92B
Forward P/E Ratio 29.43
Price/Book Ratio 6.79
Revenue (TTM) $166.03B
YoY Quarterly Revenue Growth -1.70%
Profit Margin 18.99%

If you liked this analysis, check out Stock Guides for other stocks.

Follow Us