In an era dominated by technological giants, Alphabet (GOOGL), Google’s parent company, is not receiving the love it potentially deserves from investors. Surprisingly, its relative strength compared to other equities seems to be down and underappreciated.
Relative strength is an investment strategy that has been adopted by investors worldwide. It encompasses the process of identifying the strongest performing stocks compared to others over time and judging their potential for future performance. For Alphabet, the relative strength is measured against other technology giants like Apple, Facebook, Amazon, and several others.
In the forecast of Global Market Investors, the relative strength of Alphabet (GOOGL) was rated a mere 32 out of a possible 100 which means that 68% of the other companies examined by GMI have a higher relative strength. This low score drags Alphabet stock into an undervalued and underappreciated category amongst individual stock choices.
However, contrary to GMI rankings, Alphabet boasts all the markers of a potentially robust stock with promising future growth. The company has shown strong profit margins and exponential growth year over year. In 2021 alone, Alphabet generated revenue of $182.53 billion, up from $161.86 billion in 2020.
Alphabet is also synonymous with user-centric innovation. From the ubiquitous Google search engine to Android, YouTube, Google Cloud, and self-driving pioneer Waymo, Alphabet’s repertoire extends far beyond simple web advertising. This diverse product portfolio sets Alphabet on multiple growth vectors and displays its commitment to innovation and user convenience.
Despite this, Alphabet’s relative strength continues to suffer, overshadowed by perceived industry giants such as Apple and Amazon. However, it’s crucial to note that by focusing on relative strength alone, investors might overlook other important factors surrounding Alphabet’s overall business performance.
For one, Alphabet’s commitment to reducing its dependence on advertising revenue and venturing into other technology domains like cloud computing, artificial intelligence, and autonomous driving technology, indicates a forward-thinking strategic vision. Furthermore, it’s recent focus on breaking down its earnings by segment for the first time, shows a greater commitment to transparency, a move likely to instill more investor confidence.
Secondly, Alphabet’s Google Cloud stands as a promising runner in the cloud computing market. While it is currently in third place behind Amazon Web Services (AWS) and Microsoft Azure, Google’s cloud platform has shown steady growth. With the company’s strong technical foundation and innovative capabilities, Google Cloud has the potential to close the gap on its competitors.
Lastly, Alphabet’s strong cash flows and massive capital reserves put it in an impressive position to weather economic downturns and continue investment in its varied ventures. That means Alphabet has the resilience to survive and thrive in the face of challenges, a crucial feature for long-term investors.
In conclusion, while Alphabet (GOOGL) may have a lower relative strength compared to other tech stocks, its diverse product offerings, potential for future growth, strategic vision and strong financial backing make it a worthy contender in the market. Investors would indeed do well to look beyond relative strength and consider Alphabet’s overall standing and potential in the technology industry before making their decisions.