ALPHABET INC-CL A (NASDAQ:GOOGL) - A Strong Candidate for Growth at a Reasonable Price
By Mill Chart
Last update: May 16, 2025
ALPHABET INC-CL A (NASDAQ:GOOGL) 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 earnings growth, solid profitability, and a reasonable valuation.
Why GOOGL Fits the GARP Approach
- Earnings Growth: Over the past five years, GOOGL has delivered an average annual EPS growth of 25.25%, well above the 15% threshold Lynch favors. This demonstrates sustained profitability without excessive growth that could be unsustainable.
- Reasonable Valuation: The PEG ratio (5Y) of 1.43 suggests the stock is fairly valued relative to its historical growth. While not below 1, it remains reasonable given the company’s strong fundamentals.
- Strong Profitability: With a return on equity (ROE) of 32.15%, GOOGL outperforms most peers in the Interactive Media & Services industry. High ROE indicates efficient use of shareholder capital.
- Healthy Balance Sheet: A debt-to-equity ratio of 0.04 reflects minimal reliance on borrowing, aligning with Lynch’s preference for financially stable companies. The current ratio of 1.77 also confirms ample liquidity to cover short-term obligations.
Fundamental Highlights
GOOGL’s fundamental report highlights its strengths:
- Profitability: Scores 9/10, with industry-leading margins and returns.
- Financial Health: Scores 8/10, supported by low debt and strong solvency metrics.
- Growth: Scores 7/10, with consistent revenue and earnings expansion.
- Valuation: Neutral at 5/10, trading in line with industry peers despite superior profitability.
Our Peter Lynch Strategy screener lists more stocks that fit this strategy and is updated regularly.
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.
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