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 profitability, sustainable growth, and sound financial health—all while trading at a reasonable valuation.

Why GOOGL Fits the GARP Approach

• Sustainable Growth: GOOGL has delivered a 5-year average 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 (0.82) is below 1, suggesting it is reasonably priced relative to its earnings growth.
• Strong Profitability: With a return on equity (ROE) of 32.15%, the company efficiently generates profits from shareholder investments.
• Healthy Balance Sheet: A debt-to-equity ratio of 0.04 reflects minimal reliance on borrowing, while a current ratio of 1.77 ensures ample liquidity for short-term obligations.

Fundamental Strengths

GOOGL earns a 7/10 in our fundamental rating, excelling in profitability and financial health. Key highlights include:

• High Margins: Operating margin of 33.15% and profit margin of 30.86% outperform most peers.
• Efficient Capital Use: ROIC of 26.71% indicates effective reinvestment of capital.
• Growth Outlook: Revenue and earnings are expected to grow at 10.34% and 15.52% annually, respectively.

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

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

Disclaimer

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