WHY GOOGLE SHOULD BE YOUR NEXT INVESTMENT
After many years of investing, Google has consistently been one of my largest investments and has made me a considerable amount of money along the way. Right now Google is the biggest position in my stock portfolio and there are many reasons for that. I've listed these below and I believe that after reading this article you'll agree with me that Google has the potential to soon become the most valuable company in the world!
1) BROAD GROWTH!
Most companies rely on 1 or 2 hit products or services but not Google! Sure, they still make the vast majority of their earnings through their search business but the company is becoming extremely well positioned in AI, cloud, gaming, streaming, transport, hardware, quantum computing and more. This diversification not only protects Google from innovation and disruption but also gives them huge growth opportunities within multiple markets!
Google is also one of the most active corporate venture groups in the world and some of the businesses they own stakes in are extremely exciting! These include: Uber, Lyft, JD.com, Ripple, Editas, Slack, Stripe, Cloudera & Lemonade to name a few!
2) ROCK SOLID FUNDAMENTALS!
Google’s average price to earnings (PE) ratio over the past 5 years has been just below 30. The stock currently trades with a PE of just that (30) and as a result, I believe that the share price will likely climb more or less in tandem with their earnings growth over the next few years. Given Google's expected earnings potential over the next couple of years, plus the amount that they usually surpass estimates by, it's conceivable that Google's share price could rise by 15-20% per year for the foreseeable future. They also recently announced a $25b share buyback programme and they're now the most cash rich company in the world so their fundamentals are rock solid!
3) BRILLIANT MANAGEMENT!
Founders Larry Page and Sergey Brin may have recently stepped down but they still hold huge investments in the company and this is a sign of confidence from two of the brightest and most successful businessmen ever (13th & 14th richest men on the planet). The highly regarded Sundar Pichai is now in charge and, like Larry and Sergey, Sundar's wealth is heavily tied to the success of Google with an estimated $1b in shares. I say this because companies with CEO's that own a lot of shares in the business tend to outperform those that don't.
Lastly, I want to reiterate that the most exciting thing about Google is their investment strategy and the areas that they are choosing to focus on, for starters they are well positioned in:
Self-driving technology - They're the front runners in developing this breakthrough technology meaning that Google could soon become Uber 2.0
Hardware - If Google can perfect their Chromebooks, Pixel phones and Fitbit wearables then you're looking at a business with extreme similarities to the worlds current most valuable company... Apple
Streaming - Google's very own streaming platform "Youtube" is the second most visited site on the internet (after Google) and has over 2 billion monthly active users which is 15x more than Netflix
Cloud - Both Amazon & Microsoft continue to benefit from the rise of cloud computing thanks to the work from home movement but Google's cloud division is growing faster than both of them
Gaming - Google "Stadia" may have started out poorly but their efforts to replace the Xbox & Playstation could still well happen as they continue to strike partnerships with gaming studios to bring huge amounts of content to the platform
I could go on about their ventures in AI, Augmented Reality and Quantum computing but you get the point. Google is not just the most dominant online advertising business in the world, it's also got the potential to become the next Apple, Microsoft, Uber or Netflix!
If you want to start investing and make Google your first purchase then you can begin trading shares for free via the eToro app by clicking HERE! In the mean time, be sure to check out the rest of our trading blog for more interesting articles and tutorials!
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