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

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

Why GOOG Fits the GARP Approach

• Earnings Growth: Over the past five years, GOOG has delivered an impressive average annual EPS growth of 25.25%, well within Lynch’s preferred range of 15-30%. This signals sustainable expansion rather than overheated growth.
• Attractive Valuation: With a PEG ratio of 0.83 (below Lynch’s threshold of 1), the stock appears reasonably priced relative to its earnings growth.
• Strong Profitability: GOOG’s return on equity (ROE) of 32.15% far exceeds the 15% minimum Lynch favored, reflecting efficient use of shareholder capital.
• Healthy Balance Sheet: A debt-to-equity ratio of 0.04 indicates minimal reliance on borrowing, aligning with Lynch’s preference for financially stable companies. The current ratio of 1.77 also suggests ample liquidity.

Fundamental Strengths

GOOG’s fundamental rating of 7/10 highlights its well-rounded profile:

• Profitability: Scores 9/10, with industry-leading margins and returns on capital.
• Financial Health: An 8/10 rating reflects solid solvency and manageable debt levels.
• Growth: Revenue and earnings have grown consistently, supported by strong positions in digital advertising, cloud computing, and AI.

For a deeper dive, review the full fundamental analysis of GOOG.

Our Peter Lynch Strategy screener lists more stocks that fit this strategy and is updated regularly.

Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.