There is a reason that Wall Street loves ABC, because it always manages to bring dividends and profits. Alphabet Inc., the parent company of Google, by far is the most sought stock and a healthy investment for years to come due to its prudent business model that not just relies on online advertisements, but also on software distribution, internet of things and upcoming mobile phones dubbed the Pixel lineup.
Considering the pace at which the stock prices increases, Alphabet can reach $1,000 next year, due to a 21 percent rise last year and an expected 20 percent upside potential this year. Google’s revenue grew by 21 percent in 2015, while its smaller rival Facebook grew by 59 percent year on year. Although there is no direct comparison of both companies, the online advertisement business that includes both mobile and digital platforms, are toe to toe. Moreover, Google’s brand and its search engine have been the go–to brand for billions of internet users for years.
Alphabet has 28 percent operating profit margin to revenues, while generating $6.9 billion in free cash flows last year. It is also sitting on a cash pile of $78.5 billion, ample to withstand any long-term shocks. It holds a PE Ratio of 19, considered average with other S&P500 stocks of 18. Hence, Alphabet with new innovations is all set to dominate the digital advertising business for some time, making it a neutral stock to hold in all economic conditions.