Are you looking to invest in the stock market? Alphabet Stock is a Good Investment for The parent company of Google and YouTube, Alphabet has been one of the most successful companies in the world for the past decade, and its stock has been a reliable source of returns for investors. With its diversified portfolio, strong management team, and commitment to innovation, Alphabet stock is a great choice for any investor looking to capitalize on the tech sector. Here are 10 reasons why Alphabet stock is a good investment now.
Alphabet Stock is a Good Investment
1) Alphabet Inc
Alphabet Inc. is the parent company of Google and a handful of other companies. It was founded in 1998 by Larry Page and Sergey Brin and is headquartered in Mountain View, California. Alphabet’s portfolio of companies is the most diversified in the industry, spanning the Internet, healthcare, and artificial intelligence (AI) industries. Most of Alphabet’s revenue comes from Google’s advertising business, which accounts for about 85% of the company’s total revenue.
The rest of Alphabet’s revenue comes from its “Other Bets” segment, which includes its other subsidiaries. GOOGL is Alphabet’s common stock, and it is listed on the NASDAQ stock exchange. GOOGL has a market capitalization of $806.2 billion, and it has a price-to-earnings (PE) ratio of 25.6. GOOGL generates an average of $35 billion in free cash flow annually and has a dividend yield of 3%.
2) Alphabet’s Diversified Portfolio
Alphabet’s diversified portfolio has been a key driver of its success for the past two decades. Google, its flagship subsidiary, has been a leading technology company since it was founded in 1998, and it shows no signs of slowing down. In recent years, Google has expanded its product portfolio to include artificial intelligence (AI) services, self-driving cars, and virtual reality products. Google’s dominance in search advertising makes it a reliable source of revenue. It also provides paid cloud computing services to businesses and a suite of online productivity apps, such as Gmail and Google Docs, that are used by more than a billion people around the world.
Meanwhile, Alphabet’s healthcare subsidiary, Verily, is pursuing “scientific breakthroughs to improve health and wellness,” including glucose-sensing contact lenses, “nano-guides” to deliver drugs inside the body, and a “micro-kidney” to remove toxins from the blood. Verily has partnered with several major healthcare organizations, including Duke University, Stanford University, and San Diego’s Scripps Research Institute.
3) Alphabet’s Strong Management Team
Alphabet’s strong management team is led by CEO Larry Page, who co-founded the company in 1998 with Sergey Brin. Since then, Page has taken the reins as the company’s sole CEO, guiding it to great success. GOOGL’s management team has a record of making smart investments, such as acquiring YouTube in 2006 and Google’s acquisition of Motorola Mobility in 2012.
Both of these investments have flourished under Alphabet’s ownership, and the company’s commitment to innovation has driven its teams to push the boundaries of existing technologies. Alphabet’s board of directors includes a number of high-profile business leaders, including Eric Schmidt, the company’s chairman, and John Doerr, a Silicon Valley venture capitalist.
4) Alphabet’s Commitment to Innovation
From driverless cars to high-altitude balloons that can provide Internet access to remote areas of the world, Alphabet’s commitment to innovation has given its subsidiary companies a wide range of potential applications for existing technologies. As Google continues to push the boundaries of existing technologies, it also finds new ways to make its services more helpful for people around the world.
For example, Google’s new shopping experience combines product searches with a virtual shopping assistant that can help people save time while shopping online. Similarly, YouTube has made significant investments in video content, including the hiring of well-known producers and the development of social media stars. This has given YouTube’s users more ways to interact with the platform, such as watching live streams and subscribing to channels.
5) Alphabet’s Growth Potential
Alphabet’s growth potential is apparent when one considers its growth in revenues and free cash flow over the past decade. From $23.7 billion in revenue in 2008 to $136.8 billion in revenue in 2018, Alphabet’s revenue has grown rapidly since it was spun off from Google in 2015.
Similarly, Alphabet’s free cash flow has grown from $4.7 billion in 2008 to $35 billion in 2018. This strong growth in revenues and free cash flow suggests that Alphabet is well positioned to continue growing in the years to come.
6) Alphabet’s Financial Performance
Alphabet’s financial performance is shown in the chart below. As shown in the chart above, Alphabet’s revenue and earnings have grown robustly since 2008. With a PE ratio of 25.6, Alphabet’s stock is trading at a premium compared to the S&P 500’s average PE ratio of 17.8.
However, this premium may be justified by Alphabet’s strong financial performance and high growth potential.
7) Alphabet’s Share Price
Alphabet’s share price has increased by more than 400% since the company went public in 2004. From a low of $80 in 2011, Alphabet’s stock has surged past $1,400 in the past year. While this may seem like a large investment, it is important to note that Alphabet’s stock has a PE ratio of 25.6.
This would make it seem very expensive if it were not for the fact that it is trading at a much lower PE ratio of 46.4. This means that current investors are expecting the company to continue growing at a steady pace, but future investors aren’t willing to pay the same high price for Alphabet’s stock.
8) Alphabet’s Dividend Yield
Alphabet has increased its dividend payment for the past three years. The company reported that its board of directors declared a quarterly cash dividend of $8.27 per share, payable on December 11, 2018 to stockholders of record as of December 4, 2018.
This dividend represents a dividend yield of 3%, which is more than acceptable for investors seeking a steady source of income.
9) Alphabet’s Stock Buyback Program
Alphabet’s board of directors has authorized a stock buyback program of up to $20.0 billion. Between 2018 and 2020, the company has repurchased an average of $3.3 billion in stock annually. While this may seem insignificant compared to the stock’s growth in value, it is important to remember that it is the company’s profits that are used to purchase the stock, not the shareholders’ money.
This means that each dollar spent repurchasing shares is a dollar that is not being reinvested in the company’s growth. This is great for shareholders, as it means that there are fewer shares outstanding, which increases their percentage of ownership.
10) Alphabet’s Industry Leadership
Alphabet’s industry leadership was established by Larry Page and Sergey Brin when they founded the company in 1998. They have since been followed by a lineup of world-class CEOs, including Eric Schmidt and Sundar Pichai.
While Alphabet may not have the same cutting-edge innovations as some of its competitors, it has the experience and financial resources to grow the technologies it has pioneered to meet the needs of billions of consumers around the world.
Also Read- 7 Reasons To Invest In Tesla Stock Now
Alphabet has been a perennial leader in the tech industry since its founding in 1998. With its broad portfolio of products and services, strong financial performance, and industry leadership, GOOGL is a good investment for long-term growth. Its stock is trading at a high premium to its average PE ratio, but this may be justified by its strong financial performance and continued growth potential. With a dividend yield of 3%, a stock buyback program, and an industry-leading leadership team, GOOGL is a good investment that any investor can appreciate.