TS2B: Tech Stocks 2 Buy, Mega-Cap Edition: Alphabet 02.15.21

Good Monday everyone and welcome to the BCB Cyber Series that takes on the tech stocks that can provide the cyber-fuel we need to pursue our digital wealth passions.

Top Tech Stocks to Buy in Tech: Alphabet Inc

Today, we are returning to Mega-Cap Tech Stocks, and this month that means another of the world’s largest. This time it’s a company that is synonymous with the very product it built its enterprise on: Search. That company is Google, more specifically its parent holding company: Alphabet Inc.

Before we get there though, as always, our reminder: with BCB Cyber we dig for the cyber-fuel we need, we are always working to make sure the best of the best, those monster companies in Tech, form a key portion of our portfolios. We are there to help each other reach our financial goals by building on technologically-driven growth.

For all these mega-cap stocks, just like Investopedia, our core defining feature is that the market cap is over $200 Billion. And, do we ever have one that is over that cap today!.

As always though, we dig deeper still, looking for those companies that are pushed by incredible disruptive tech with a great story, not to mention having a solid base in the numbers.

Before we dive too deep though, we strongly advocate that we don’t act solely on anyone else’s opinion, not even ours! Make sure we are all thinking for ourselves as self-definers and making our own decisions. In the end, the responsibility is on each one of us as individuals. So decide wisely!

Jumping right in now the BCB Cyber way, we cover 3 quick pieces of important information so we can get moving on our day. First, we tackle the story to find out who and what the company is, second, we look at the numbers both positive and negative, and finally we discuss our position on the stock.

This is TS2B, Tech Stock to Buy, Mega-Cap edition, and this week we are going to take on Alphabet Inc., the Mountain View California, search-built mega-corp. Alphabet is in the Internet Content & Information Industry and the Communication Services Sector.

BCB Cyber: Mega-Cap Analysis for 02.15.21

1 – STORY

Alphabet Inc. AKA Google

Unlike last month’s analysis on Medtronic, where we saw a sector comparison that illustrated a competitive edge across nearly all six aspects of the analysis, Alphabet, described hereafter only as Google (GOOG; Yes we’re aware of GOOGL but for our analysis here we are focusing on the first, though there is little difference in the materials presented other than voting position), is more specified. Recognized as possessing a competitive edge in Earnings and Innovation. The story outset seems to indicate that Google is that true Mega-Corp where we see a company built on Innovation and a pile of Cash.

For Google Co-Founders Larry Page and Sergey Brin, the founding of Google and what would become Alphabet began with what they thought were a bunch of crazy ideas but would become international standards today: things like Google Maps, YouTube, and Android. How many of us can say these things haven’t changed our lives?

For Google today, though, they seem to be changing its focus and moving toward self-driving cars, artificial intelligence, and life sciences & healthcare. However, the difference now seems to be the move toward effective management at the largest scales possible. In other words, working to be as large as possible encompassing as many innovative elements under one roof as they can.

Just check out their latest earnings release and we can see the focus on organization and the scale with regard to the assets contained within the balance sheet of this tech giant. Incredible numbers for sure. Although maybe not as high as the many billions we might have expected from a trillion-dollar company, that’s right the market cap for Google (GOOG) is (on 2.15.21) $1.42 Trillion.

However, their revenue and earnings numbers definitely correlate. But we’ll see more on that in a minute.

With any large company, Google ends up in its fair share of entanglements, however. In an ever-growing, ever-evolving relationship with the many countries and companies Google does business with that landscape is growing and changing through new agreements that many begin to limit its profitability.

Along with the territory of being one of the largest tech companies in the world focused wholly on growth and scale, comes allegations of anti-competitive abuses.

This would all be expected, even allowable, as it should only stand to reason for a great company that creates life-changing products should want to continue to grow and provide more value for the world. In doing so they would need to gain more market share and increase revenues/profits. However, apparently, it doesn’t also come without a certain level of hypocrisy.

For those following BCB Cyber, you’ll know we’ve been tracking another company, Nvidia, trying to grow to do the same as Google is apparently here, that is to say adding value and needing to expand its reach. The difference here appears to be that companies like Google may want to have their cake and eat it too. Making complaints about other companies expanding share and creating monopolistic situations when they too are already accused of the same thing.

2 – BY THE NUMBERS

BCB Cyber loves to follow five specific metrics: Revenue Growth, Forward Price to Earnings Ratio, Return on Assets, Operating Margin, and Debt Considerations.

There is no doubt that jumping in with the forward P/E that Google (GOOG) is an expensive stock to own. However, not out of line with many of the other tech companies we’ve explored. Snap for instance has incredibly high forward P/E metrics and companies like Shopify are astronomical standing (on 2/15/21) at 384.62. Compared to this Google is a steal at 32.47!

Without a doubt, growth has been good to Google as well with Revenues steadily rising over the last several years to great heights. Earnings too have come into their own, reaching around $40 Billion in 2020 for the first time as the company’s revenue pushed over $180 Billion.

In terms of a stock to own, Google in the most recent quarter ended 2020, once gain demonstrated that they are superior in terms of their managment capabilities creating impressive margins and great returns for their shareholders.

Perhaps where Google shines the brightest though, as if all the previous wasn’t good enough, is in their ability to handle debt and reinvest in the company. The cash position is far and away capable of handling the debt (though substantial). With nearly 5 times the amount of cash to debt in the most recent quarter, Google has a balance sheet clearly envied by all its competitors.

3 – THE BCB CYBER TAKE

As of this morning, on 02.15.21 (Happy Presidents Day everyone!), my own portfolio has a position of 0.00% in Google with a cost basis (average cost) of $00.00. Nope, those numbers aren’t missing; they are accurate, we don’t own any Google. Not that we don’t think that Google isn’t worthy in this instance. And, it’s certainly not to say that it isn’t a great company. This is definitely a stock worth buying at the right price and one that BCB Cyber believes to be the right fuel for the fire!

In fact, we’d be willing to say it’s one of the best disruptive tech plays in all of Technology, and that is saying something.

Analysts would definitely seem to agree as Morgan Stanley recently gave Medtronic an upgrade and many others are recommending a buy, particularly given the fact that the stock price does seem to sit in value territory (see below)!

Remember, we are just like the masses, struggling to make ends meet and build our future. So, we start building and keep doing our homework. This is just what we need to start us on our journey toward cyberizing our lives.

BCB Cyber believes in the potential for this massive tech innovator to continue to be a major player and a true Mega-Cap and Mega-Corp in the finest of Cyberpunk traditions. Like we’ve said, it’s time we, the Masses, profit from the world’s leading tech companies, and this is definitely one of the leading examples. If someone is looking for a fantastic company and could somehow get this one in a pullback on the price to under $1900 we’d definitely say go for it.

However, we at BCB Cyber balance our perspective and cyberize our wealth over a longer term of 5 years or more. We think Google is incredible and does some amazing things to help society. However, we can’t say we are crazy about the apparent hypocrisy when it comes to other companies reaching similar status; nor, can we seem to get past it. And for this reason, Google is on that edge for us. As we push for those companies we’d be willing to hold forever, we just can’t own this one under the current leadership.

Remember, as always, think for yourself, do your own homework, and cyberize your life with the best in disruptive tech. Learn more in our Wealth Section and dive deeper into Establishing the Baseline on BCB Cyber.com!