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

ALPHABET INC-CL C (NASDAQ:GOOG) stands out as a high-quality stock based on the Caviar Cruise screening strategy, which focuses on companies with strong profitability, financial health, and sustainable growth. The company’s fundamentals align well with the criteria used by quality investors, making it a compelling option for long-term holdings.

Key Strengths of ALPHABET INC-CL C

• High Return on Invested Capital (ROIC): GOOG reports an ROIC of 40%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
• Strong Revenue and EBIT Growth: Over the past five years, revenue has grown at a 10.4% annual rate, while EBIT growth has been even stronger at 25.9%, signaling improving profitability.
• Low Debt Relative to Cash Flow: The company’s debt-to-free-cash-flow ratio is just 0.19, meaning it could pay off all debt in less than a quarter using current cash flows.
• High Profit Quality: With a five-year average profit quality of 92.3%, GOOG converts nearly all net income into free cash flow, a sign of reliable earnings.
• Positive Analyst Expectations: Future revenue growth is projected at 10.5% annually, reinforcing confidence in continued expansion.

Fundamental Analysis Summary

Our fundamental report assigns GOOG a rating of 7 out of 10, highlighting its excellent profitability, strong financial health, and steady growth. The company outperforms most peers in its industry, with high margins and efficient capital allocation. While its valuation is not deeply discounted, it remains reasonable relative to growth prospects.

For investors seeking high-quality businesses with durable competitive advantages, ALPHABET INC-CL C presents a strong case.

The Caviar Cruise screener lists more quality stocks meeting these criteria.

Disclaimer

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