jeudi 4 février 2021

The great Google

Some time ago, a guy on Twitter asked "If you had to own only one stock, which one would it be?". I said Google. 

Of course, it would be a very bad idea to own only one stock, whatever the level of love or worship you have for the CEO. But, to me, Google is close to the perfect stock

It's a monopoly, it's central to all our lives, the trafic on Google and Youtube is huge and a competitor would have a lot of difficulty to appear and beat Google. They'd probably have to bomb Google offices to achieve some success.

 Earlier this week, Alphabet/Google released it's earnings, and they were fucking great.. 

During the last quarter, their EPS went from 15,35$ to 22,30$. That's a 45% increase. For a HUGE company, it's quite an achievement.

In 2011, EPS were 15,10$. In 2016, they were 18,27$. In 2020, they were 59,15$. 

Plus, the company has very little debt and about 137 billion dollars cash.

Another obvious story. I have no merit. I just took a look at the numbers, thought a few minutes about the business model, and I understood that I had to buy some shares. 

Yes, it's a 1,4 trillion dollars company. Yes, shares are sold for more than 2000$ US. But the forward PE is only 26. Which is very cheap in my opinion for such a strong and dominant company. 

Yesterday, I wrote a post about Topicus. Frankly, would I pay 50 times the earnings for that company which seems nice but which I don't know too much about? Plus, the growth is estimated to be 18-20% per year. 

Hey, there's Google just in your face. For only 26 times the earnings (substract the cash and you'll get it for 23-24 times the earnings). Why fucking  paying twice the PE of Google for a company that's growing in a similar way and that may very well be not as solid?

There's something just besides you that proved long ago that it works very well and will continue do to for a long time... Probably.

1 commentaire:

  1. If I had to choose only between YouTube or Netflix I would choose YouTube. Who knows what Waymo will become too. I like Chromebooks over traditional laptops. Their brand doesn't seem to be that appealling though. A lot of their products don't seem to get much traction(hangouts, Pixel phones, chromecast). Or am I just out of the loop?