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

ALPHABET INC-CL A (NASDAQ:GOOGL) stands out as a compelling choice 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 an attractive 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.
• Reasonable Valuation: With a PEG ratio of 0.90 (below Lynch’s threshold of 1), the stock is priced attractively relative to its earnings growth.
• Strong Profitability: The company’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 and a current ratio of 1.77 suggest minimal financial risk and ample liquidity.

Fundamental Strengths

GOOGL’s financial health is robust, with high marks for profitability and solvency. Its operating margin of 33.15% and ROIC of 26.71% outperform most peers in the Interactive Media & Services industry. While the P/E ratio of 22.70 appears slightly elevated, it’s justified by the company’s growth trajectory and industry-leading margins.

For a deeper analysis, review the full fundamental report.

Our Peter Lynch Strategy screener lists more stocks that align with these principles.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own research before making investment decisions.