ALPHABET INC-CL C (NASDAQ:GOOG) - A Strong Candidate for GARP Investors

ALPHABET INC-CL C (NASDAQ:GOOG) stands out as a compelling choice for investors seeking long-term growth at a reasonable price (GARP). The company meets key criteria from Peter Lynch’s investment strategy, combining sustainable growth, strong profitability, and a reasonable valuation.

Why GOOG Fits the GARP Approach

• Sustainable Growth: Over the past five years, GOOG has delivered an average annual EPS growth of 25.25%, well within Lynch’s preferred range of 15-30%. This indicates steady, manageable expansion rather than overheated growth.
• Attractive Valuation: The stock’s PEG ratio (5-year) of 0.88 suggests it is undervalued relative to its earnings growth, a hallmark of Lynch’s strategy. A PEG below 1 often signals a bargain.
• Strong Profitability: With a return on equity (ROE) of 32.15%, GOOG ranks among the top performers in its industry, demonstrating efficient use of shareholder capital.
• Healthy Balance Sheet: A debt-to-equity ratio of 0.04 and a current ratio of 1.77 reflect financial stability, reducing risk for long-term investors.

Fundamental Strengths

Our fundamental analysis rates GOOG 7 out of 10, highlighting its excellent profitability and financial health. Key takeaways include:

• High Margins: Operating margins of 33.15% and profit margins of 30.86% outperform most peers.
• Efficient Capital Use: ROIC of 26.71% shows effective reinvestment of capital.
• Positive Cash Flow: Consistent operating cash flow supports continued growth and innovation.

For a deeper dive, review the full fundamental report on GOOG.

Our Peter Lynch Strategy screener lists more stocks that fit this proven investment approach.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.