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

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 growth, profitability, and sound financial health with an attractive valuation.

Why GOOGL Fits the GARP Approach

• Sustainable Growth: Over the past five years, GOOGL has delivered an impressive EPS growth rate of 25.25%, well within Lynch’s preferred range of 15% to 30%. This indicates steady, manageable expansion rather than overheated growth.
• Reasonable Valuation: The stock’s PEG ratio (0.79) is below 1, suggesting it is undervalued relative to its earnings growth. Its P/E ratio of 19.95 is also below the S&P 500 average, making it reasonably priced for its quality.
• Strong Profitability: With a return on equity (ROE) of 32.15%, GOOGL ranks in the top tier of its industry, reflecting efficient use of shareholder capital.
• Healthy Balance Sheet: A debt-to-equity ratio of just 0.04 highlights minimal reliance on borrowing, while a current ratio of 1.77 ensures ample liquidity to cover short-term obligations.

Fundamental Highlights

GOOGL earns a high fundamental rating of 8 out of 10, excelling in profitability and financial health. The company generates consistent earnings and cash flow, with margins and returns well above industry averages. While its valuation is not the cheapest, the combination of growth, stability, and reasonable pricing makes it a standout.

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

Our Peter Lynch Strategy screener lists more stocks that align with this approach and is updated regularly.

Disclaimer

This is not investing advice. The observations here are based on current data, but investors should conduct their own research before making decisions.