GOOGL at $110.34
It’s not exactly a secret–more in the “hiding in plain sight” category.
But worth mentioning nonetheless.
Fun with numbers:
Consider four things you might consider in an investment
- Net profit margins
- Rate of revenue growth in the last several years
- P/E–why not?
- How much cheaper something is relative to the average valuation level in the last five years.
For GOOGL, by coincidence all four of those things are 21-22%.
For “cheapness” I used price to sales, since their net margins are a bit variable.
Five year average P/S is 6.60; current number is 5.22
Though it’s far from a sure thing, historically entries under 6 have worked out quite well fairly soon.
Taking those four metrics together to give a gestalt, it seems like a very good deal.
Consider PEG decay, in a poor future:
If revenue growth per share and P/E both fell by 1 per year for a decade, both dropping to 11, with flat margins, you’d still make 8.2%/year.
The business certainly has a wonderful moat, even if governments continue to go after them.
If I gave you $100bn, could you build a competitor meaningful enough to take 40% of their market from them?
Almost certainly not.
If you need some evidence supporting that contention, there’s plenty available on line: just Bing it.
Jim
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If I gave you $100bn, could you build a competitor meaningful enough to take 40% of their market from them?
https://neeva.com/
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GOOGL at $110.34…
Currently trading at $98.95.
Looks kinda like a deal to me.
(though more than a couple of things do, today)
Bad outcomes?
It could certainly get cheaper for a while.
It could be flat for a pretty long while.
But I can’t really picture today’s buyers losing money if they’re patient.
I very much doubt that real earnings per share have peaked. (trailing $5.38, 2023 estimates around $5.92)
Imagine if they were to manage rising 50% one more time and stay there–it would be an ongoing earnings yield of 8.2%.
Given the remarkable resilience of the business, that would usually correspond to a satisfactory outcome.
Jim
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Currently trading at $98.95.
Looks kinda like a deal to me.
I agree, however I would discount their net margins. According to VL they were almost 30% last year after averaging around 22% for a decade. I have adjusted ttm earnings of around $4.70 based on 22.5% net margins, which puts them at a PE of 21 rather than 18. I’m sniffing right now and may take another small bite. I’ll get frisky at $85, and I’m going to town at $70.
PP
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Grabbed some more at $98.60. Too tempting, if not ridiculously cheap, at that price.
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