Thinking of trading ALPHABET?
- 1. Wall Street legend Warren Buffett has said he always prefers companies with a durable competitive advantage over peers. Google's search engine dominates the online search market, and its massive scale and technology advantages will make it difficult for other companies to threaten that position over time. 2. The FANG stocks have led the Nasdaq composite higher during the past decade. However, Amazon.com (AMZN) and Netflix (NFLX) both have forward earnings multiples above 50, some of the highest valuations on the Nasdaq. Facebook (FB) has its own set of problems with abuse of its platform, potential government regulations and data security issues. A reasonable forward earnings multiple of 24.3 and relatively low headline risk make GOOGL's stock price the safest bet of the group. Alphabet has never been a dividend stock, but its impressive cash flow growth suggests it could opt for a dividend soon. 3. Google subsidiary Waymo is its autonomous vehicle business, and it could be worth much more than investors realize. Nowak says Waymo could ultimately reach a $175 billion market cap, more than the current market cap of Ford Motor Co. (F), General Motors Co. (GM) and Tesla (TSLA) combined. In mid-2018, Waymo announced it has logged 10 million driver less test miles on public roads. Uber, the closest competition, has driven only 3 million public test miles.
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How would you like to trade ALPHABET?
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Trading CFDs involves significant risk of loss
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Trading CFDs involves significant risk of loss
For beginners:
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Trading CFDs involves significant risk of loss
Trade ALPHABET with Fondex. Our CFD trading platform is engineered to provide you with optimal execution speed while allowing you to access 3 different trading methods on the same interface.
1. Something worth keeping in mind when holding Alphabet's shares are its competitors, particularly Amazon.com (AMZN). The greatest long-term risk Amazon poses to GOOG is its encroachment into voice search - perhaps the future of search itself - where its Alexa virtual assistant has a huge first-mover advantage. Amazon is also seizing digital advertising dollars, as marketers shift spending to Amazon.com's growing platform and more and more lucrative product searches begin on Amazon than Google. 2. Another thing to worry about is the specter of regulation, which is getting bigger and bigger headlines. Facebook's problems have already attracted scrutiny that could envelop all of the major internet services giants. 3. There seems to be a moderate cyclical overvaluation, and GOOG shares are affected by this. Alphabet trades for about 34 times adjusted earnings, and yet earnings per share grew at just 15 percent in 2017. Legendary growth investor Peter Lynch advised trying to buy stocks at a price-earnings ratio equal to or less than the earnings growth rate, and that rule of thumb still stands today.
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