GOOGL - Google Stock: You Won't Buy It Cheap Here

2024-06-25 05:10:15 ET

Summary

• My estimates suggest that we should see a decline in Google stock price before it can be considered undervalued.
• Google is a fully-fledged dividend stock now, whose dividend yield should amount to 0.26% this year. In addition to that, the firm's innovation is moving at full speed.
• I'm concerned about the current price, which I don't consider cheap.
• My DCF model indicates an overvaluation of 9%, and that's only if we factor in an initial premium to the sales growth rate that the market has not yet recognized.
• Investors should trim or protect their existing long positions through call options selling, waiting for a better price, in my opinion.

Intro & Thesis

My coverage of Alphabet Inc. ( GOOGL ) ( GOOG ) (GOOG:CA) stock was initiated here on Seeking Alpha back in November 2022. For the past 4 articles, I maintained a "Hold" rating, pointing out that Google's launch of Gemini, a large language model for AI applications, should challenge Microsoft's ( MSFT ) " AI monopoly " and could boost Google's projected EPS figures in the medium term. However, my "Hold" rating was influenced by the underwhelming GCP performance and the stock's relatively high valuation at the time....

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