Alphabet Inc. Set for Bullish Moves
Investors searching for a one-stop technology stock for their long-term portfolios should look at Alphabet Inc. (NASDAQ:GOOG), which continues to impress me. With a massive valuation at over $540.0 billion for GOOG stock, founder Sergey Brin is delivering a sort of technology incubator that every growth investor should consider.Alphabet Inc. is firing on all cylinders with its great products, innovation, and vision. GOOG stock has rewarded investors with a 21.48% move over the last 52-weeks, well ahead of the S&P 500, and delivering alpha to investors.
Chart courtesy of StockCharts.com
While Alphabet Inc. stock is known for its market-leading search engine and highly successful advertising model, the restless desire of Sergey Brin to expand into other lucrative technologies provides excellent long-term upside for GOOG stock.
With over $70.0 billion—or about $91.00 per share—in free cash, the impressive balance sheet at Alphabet Inc. will allow the company to add growth and market opportunities. (Source: “Alphabet Inc. (GOOG),” Yahoo! Finance, last accessed October 6, 2016.)
But don’t just simply take my word. About 1,701 institutions hold GOOG stock and they are adding new positions to the tune of 14.88 million shares on a quarter-to-quarter basis. (Source: Ibid.)
Game Changing Moves by Alphabet Inc.
The immediate future was put on display at the recent Alphabet Inc. launches of new products that offered a glimpse into where the company was heading.
We know that Alphabet Inc. is focused on developing its artificial intelligence (AI) capabilities, and we are beginning to see it in its products. The Google autonomous vehicle driven by a smart onboard computer and technologies is probably the closest to commercialization if the regulators approve.
But what Alphabet Inc. stock really wants is for the company to expand its presence in the hardware mobile space, where it has tons of growth potential.
The company’s mobile “Android” operating system is tops in the world, but Alphabet Inc. has really not been successful with its “Nexus” smartphone, which was a byproduct of its purchase of the smartphone unit of Motorola.
To correct the mistakes in its smartphone business, Alphabet Inc. announced its new “Pixel” phone, a complete buildup from the ground up. At first glance, the $649.00 Pixel is clearly taking aim at Apple Inc.’s (NASDAQ:AAPL) “iPhone.” Why not, given the massive growth and domination that the iPhone has attained? Alphabet Inc. wants it.
Alphabet Inc. believes that the Pixel is the ideal blend of technologies for users. Not only does it allow unlimited storage via “Google Cloud,” but it has the speed, the looks, and the apps—and it even allows easy transfer of data from the Apple “iOS” platform.
Alphabet Inc. is also taking aim at Amazon.com, Inc. (NASDAQ:AMZN) in the home technologies segment, via its launch of “Google Home,” a smart home device to battle against the “Alexa” smart home device sold by Amazon.
At the core of Google Home will be its AI capabilities, which will allow the device to link up with other smart devices in the home via voice commands. Of course, Alphabet Inc. will also try to sell you its new “Google Wi-Fi” router, which is expected to combine great looks and range.
As you can see, Alphabet Inc. wants to be in your home and on the road, which are massive growth segments going forward, and the company is on the right path. Fundamentally, GOOG stock has grown revenues and earnings five straight years, and the growth is expected to continue for the next two years. Trading at roughly 20.12 times its 2017 earnings per share (EPS), Alphabet Inc. stock is reasonable, and may be the perfect diversified technology stock.