Are You Exploring Alphabet Stock as an Investment Opportunity? Alphabet’s Stock Is an Excellent Pick
Alphabet Inc is the parent company of Google and other subsidiaries, established by Larry Page and Sergey Brin in 1998 in Mountain View, California. Alphabet’s portfolio of companies spans the Internet, healthcare and artificial intelligence (AI) industries with advertising business accounting for around 85% of total revenue.
Alphabet Stock Is A Good Investment
1) Alphabet Inc
Alphabet Inc is the parent company of Google and other subsidiaries, established by Larry Page and Sergey Brin in 1998 in Mountain View, California. Alphabet’s portfolio of companies spans the Internet, healthcare and artificial intelligence (AI) industries with advertising business accounting for around 85% of total revenue.
The remaining revenue of Alphabet comes from its “Other Bets” segment, comprising other subsidiaries. GOOGL, Alphabet’s common stock listed on NASDAQ stock exchange, has a market capitalization of $806.2 billion with a price-to-earnings (PE) ratio of 25.6 and generates an average of $35 billion annually in free cash flow with an 3% dividend yield.
2) Alphabet’s Diversified Portfolio
Alphabet’s diverse portfolio has been an essential factor in its success for nearly two decades, particularly Google, its flagship subsidiary since 1998. Google continues to lead in technology innovation; moreover, in recent years they have expanded their product offering with artificial intelligence services, self-driving cars and virtual reality products – not to mention search advertising revenue that provides reliable returns; they also offer paid cloud computing services for businesses worldwide as well as productivity apps like Gmail and Docs that are used by over one billion people globally.
Alphabet’s healthcare subsidiary, Verily, is making scientific breakthroughs that aim to enhance health and wellness; these include glucose-sensing contact lenses and “nano-guides” designed to deliver drugs inside the body; and micro kidneys to filter toxins out of blood. Verily has collaborated with major healthcare organizations such as Duke University, Stanford University and San Diego Scripps Research Institute on several projects related to these breakthroughs.
3) Alphabet’s Strong Management Team
Alphabet’s management team is led by Alphabet CEO Larry Page, co-founder of GOOGL with Sergey Brin in 1998. Since then, Page has assumed sole leadership and guided it to great success as sole CEO. Alphabet’s management has made numerous smart investments over time such as YouTube in 2006 and Motorola Mobility acquisition in 2012. GOOGL management also boasts an impressive track record when it comes to making smart investments; recent examples include YouTube acquisition in 2006 and Google acquisition of Motorola Mobility acquisition in 2012.
Alphabet’s investments have flourished under its ownership, and their commitment to innovation has encouraged their teams to push existing technologies further than before. Alphabet boasts a distinguished board, including Eric Schmidt as chairman and John Doerr as an influential Silicon Valley venture capitalist.
4) Alphabet’s Commitment To Innovation
Alphabet’s commitment to innovation has resulted in numerous subsidiary companies having an array of innovative applications for existing technologies ranging from driverless cars and Internet access balloons, to driverless cars and high-altitude balloons that provide Internet access in remote parts of the world. Google continues pushing these boundaries and finding new ways to make its services more helpful for people worldwide.
Google’s new shopping experience combines product searches with a virtual shopping assistant that helps save time when making online purchases. YouTube, too, has made significant investments in video content development with notable producers hired and social media stars being nurtured as this has given viewers multiple ways to engage with YouTube’s platform, including watching live streams or subscribing to channels.
5) Alphabet’s Growth Potential
Alphabet’s growth potential can be easily seen when one considers its explosive revenue and free cash flow growth over the past decade. From $23.7 billion in 2008 to over $136.8 billion by 2018, Alphabet’s revenue has expanded quickly since being separated from Google in 2015.
Alphabet’s free cash flow has also experienced impressive growth since 2008 – it jumped from $4.7 billion in 2008 to $35 billion by 2018. These impressive figures indicate that Alphabet will likely experience continued success and expansion for years to come.
6) Alphabet’s Financial Performance
Alphabet’s financial performance can be seen in the chart below. Since 2008, both revenue and earnings at Alphabet have experienced robust growth; their PE ratio of 25.6 is more expensive than that of S&P 500 average PE ratios (17.8).
Alphabet may justify its premium with strong financial performance and robust growth potential.
7) Alphabet’s Share Price
Since 2004 when Alphabet went public, its stock has seen a remarkable 406% surge since hitting rock-bottom at $80 in 2011. Starting out from just under $140 last year and now over $1,400 today; although this may seem like a high investment figure it should be noted that its PE ratio of 25.6 makes Alphabet attractive as an investment option.
Alphabet’s Share Price On its face, Alphabet may seem costly but trading at a much lower PE ratio of 46.4 is actually indicative of current investors expecting steady growth for Alphabet; future investors might not pay as much.
8) Alphabet’s Dividend Yield
Alphabet announced an increase to their dividend payment for each of the past three years, declaring a quarterly cash dividend of $8.27 per share to stockholders who hold record on December 4, 2018. Payment of this cash dividend will take place December 11, 2018.
Alphabet’s Dividend Yield Alphabet offers an attractive dividend yield of 3% for investors looking for steady sources of income.
9) Alphabet’s Stock Buyback Program
Alphabet’s board has authorized an up to $20.0 billion stock buyback program. Since 2018, an average annual amount of $3.3 billion in stock repurchased between 2018-20 has been accomplished using profits generated from operations rather than shareholder funds.
Repurchasing shares represents a dollar not spent investing in the growth of the company, so every time one is spent doing this it means less shares outstanding and therefore an increased proportion of ownership for shareholders.
10) Alphabet’s Industry Leadership
Alphabet was launched with industry leadership by Larry Page and Sergey Brin when they co-founded it in 1998, and since then have been overseen by an exceptional lineup of CEOs including Eric Schmidt and Sundar Pichai.
Alphabet may not boast the cutting-edge innovations found among some of its competitors, but its experience and financial resources enable it to expand technologies it has pioneered to meet the needs of billions of consumers worldwide.
Also Read- 7 Reasons To Invest In Tesla Stock Now
Conclusion
Alphabet has long been one of the leaders in tech since it was founded in 1998. Thanks to its wide portfolio of products and services, strong financial performance, industry leadership status, dividend yield of 3% and buyback program; GOOGL stands as an attractive long-term investment that any investor can appreciate.
