Halls of Shrewd'm / US Policy❤
No. of Recommendations: 12
GOOGL at $170.50
It hasn't fallen much (down 18% from its high), and certainly isn't cheap by any conventional metric (P/E 21). It isn't even that cheap for Alphabet, which statistically has been a great wager only under 6 times sales (right now at 6.41).
But I find myself starting to watch, thinking about the price at which I would like to add to my long term position. Maybe now, maybe soon...
Even now, I think I'd pencil in good chances of a double digit rate of return in the next couple/few years.
Jim
No. of Recommendations: 0
Good shout for BRK to take a sizeable position you feel?
No. of Recommendations: 8
...certainly isn't cheap by any conventional metric (P/E 21). It isn't even that cheap for Alphabet, which statistically has been a great wager only under 6 times sales (right now at 6.41).
But I find myself starting to watch, thinking about the price at which I would like to add to my long term position. Maybe now, maybe soon...
Even now, I think I'd pencil in good chances of a double digit rate of return in the next couple/few years.
Yes, I have been adding some too, and I would be happy to get a chance to buy more. At a reasonable price, it is on the short list of companies with great management, customer loyalty, and great growth prospects, whose shares I have resolved never to sell: BRK, GOOG, META, IBKR, PGR, FFH. I just need another chance to make up for my past errors selling BRK and especially META...
21x earnings seems a bit expensive, but Alphabet is still generating a lot of growth, and I think they have lots of growth opportunities, particularly with Android and Youtube (like Meta with their unmonetized Whatsapp). For instance, revenue increased 14% last year, while earnings increased 36%. Even if earnings keep growing at 'just' 15-20% a year, today's price at 21 times last year's earnings doesn't seem at all unreasonable.
There were some concerns about stock-based compensation raised on the Berkshire board, which I believe are largely unfounded. Alphabet's $100.1b earnings for 2024 are what's left after deducting the $22.8b (!!) in stock-based compensation. If you look at net cash provided by operating activities ($125.3b), by adding back non-cash expenses like SBC, you get an even lower P/E ratio, which one should ignore; SBC is a real expense. But deducting it from GAAP earnings seems like it would be double-counting. I think it is obvious that companies like Google need to retain high-value employees, and SBC is part of the attraction, and an unavoidable compensation expense. It is a lot better than the stock options that used to be given out like candy AND not counted in companies' pro forma earnings. But in any case, it seem's to me it's already accounted for.
And then there's this, which would maybe clinch it as a buy:
Jim Cramer in a latest program on CNBC said he’s been selling Alphabet Inc. (NASDAQ:GOOG) shares at his investing club and mentioned some reasons for his bearish outlook:
“I mean, people know members of my club, they know I’ve been selling it down and selling it down and selling it down. Would it be the first one that I leave of the mag? Yeah, except for it does sell only for 20 times earnings. But I think they really got to rethink what their game plan is here because I feel like Gemini competes with Google search, and the thing is, the ads are endless, and they don’t know how to monitor YouTube.”
All we need now is a Barron's cover: What's wrong with Google?
No. of Recommendations: 5
FYI
https://www.shrewdm.com/MB?pid=740877039I consider $180 to be "fair value" for the stock and a normal trading range up to $200 or so to be typical, so probably not a bad entry point. Looking ahead 1 year we might reasonably expect a trading range of $200-$225 so some upside from here for sure.
tecmo
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No. of Recommendations: 0
BTW: It would be exceptional for it to trade below $150; so that can be used as a floor price with reasonable confidence.
tecmo
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No. of Recommendations: 1
Nibbled more Alphabet @ $167 FPE <20 and feels like reasonable valuation & risk/ reward. (Owner for 20 years)
No. of Recommendations: 3
Nibbled more Alphabet @ $167 FPE <20 and feels like reasonable valuation & risk/ reward.
So did I. The price may go a lot lower with the rest of the market, but I can't resist with a market cap of $2t and $100b in net earnings TTM, so a P/E of 20, less than the S&P 500 average for the company with arguably the best moat in the world. Doesn't seem right.
No. of Recommendations: 9
The competitive moat is rapidly eroding. Everyone in my circle has mentioned that their use of Google has dropped by 50% or more. ChatGPT delivers so much more context that almost every user who has tried it now invariably wants to keep coming back to it
Google’s own language model, Gemini, simply hasn’t captured the same mind share as ChatGPT. Although I’m a shareholder and do want to give Gemini a try now and then, my growing habit is to go straight to ChatGPT.
Google still offers YouTube, cloud hosting, maps, and search, but the pressure on their search business is unmistakable. I’m not adding to my holdings in that area.
I plan to look into some data on affiliate site traffic—I’ve heard it’s down by 20 to 40% because the top portion of the search page is now dominated by AI-generated results, leaving fewer opportunities for users to click on advertising links.
No. of Recommendations: 1
Maybe it was already mentioned, and I don't know how likely it would happen (probably not very) but DOJ is recommending Google sell off Chrome in the antitrust trial. Certainly not helping its stock price.
No. of Recommendations: 1
Some good discussions on the Google board.
tecmo
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No. of Recommendations: 1
Everyone in my circle has mentioned that their use of Google has dropped by 50% or more.
I've started using LLMs a little bit for my searching. At first it was just for coding questions. But now sometimes for more general questions. So maybe my use of Google has dropped by 20% or so.
