the clamoring tension of earnings season, Commissioner Gordon sleeps well. Even amid the menace of a sweaty Gotham gloom or restless analyst’s questions, Gordon grins and glows. Bullshit. Listen. Nightly the Commissioner’s dreams fill with a giant humming beacon of sweeping growth and massive funnels of swarming cash. Gotham’s volatility doesn’t matter.
Relax. You too can sleep like bliss–just like the Commissioner. How? By making Alphabet a pillar of your portfolio, not just a search engine.
In Gotham the call for help is a bat-shaped sky-sweeper in lurid saturated yellow. For investors the signal looks like this–GOOGL/GOOG. All require help on occasion. Alphabet just proved it’s Super Status on Monday. Now we know. Even a pissy sellf-righteous EU, it’s GDPR, or it’s repeated fines, will fail to weaken Google’s dominance in the western world.
While the EU behaves like the Joker, Alphabet grows like some teenage startup. On Monday the sole owner of search in the western world rocked the numbers like a sparked methane gas leak.
Even Elizabeth Warren’s stand-in as the Joker will prove insufficient to slow the hard-rolling momentum of this Googlie winner. Warren’s support of the Consumer Financial Protection Bureau ranked as an authentic attempt to help individuals. Thank you Elizabeth. Yet siding with the European Commission concerning Alphabet and supposed anti-trust violations ranks as ridiculous, and unhelpful to American trade and business.
It seems quite likely that Elizabeth Warren has not gone through the Q2 Alphabet call. But we have. Alphabet has again reasserted itself in the battle for the first trillion dollar market cap. How? 26% revenue growth, a massive, clean, 22.5% EPS beat , effective cost-control, expanding commercial affiliations for Waymo, and both Google Loon and Wing, reaching “technical milestones” as they move out from beneath the Google X tent. There is no hair on this report.
Alphabet has posted upside surprises with four of the past five earnings reports, three of which were double-digit EPS beats. That’s out-performance right?
At 4:05pm est Monday, Alphabet dropped a savage $11.75 EPS mash on a breathless digital audience.
Gasps rose as viewers reflexed in awe. Some claimed it wouldn’t be possible–but there it was. The market genuflected while eating it up. Rightly so. The monster $11.75 delivery took it’s place beside a suddenly feeble-looking $9.58 consensus EPS estimate.
Jeers rolled as psychic debris rained over Google deniers.
Gasps rose from the analyst audience. Joy filled the hearts of shareholders–including Sj. The EPS metric does not include the new EC fine of $5.01 billion, a fine already paid by the company. So what?
Companies do not get more healthy then Alphabet is now–not normal companies. And make no mistake, Alphabet, Amazon, Facebook, and Netflix, are not normal companies. Each continues to mature, yet their reach individually and collectively may prove unprecedented. They all carry tremendous transforming bites–just as Cramer implies in his coined term–FANG.
FAAG is sharper then ever before–and now more pricey. Alphabet and Amazon remain our sole picks from the gang. But who knows? Only quality creates market-beating growth. Such quality costs. Who hangs a cheap stamped chandelier in Wayne Manor? Not us, and not Alphabet.
Are Alphabet’s returns of 21% ytd, and 31.6% 1 year fast growth? Comparing Alphabet to the sky-ride Square has produced seems silly. It is. Google is twenty years old this year, and growing revenue at a 23% constant currency rate. That’s not just fast growth, but also dominant marketplace positioning, fountain-of-youth cash flow, and stunning growth stamina.
Alphabet’s annualized 5-year revenue growth rate is 19.2%, with cash flows at 15.5%. That’s with a market cap of $870b. Square’s market cap is now $28.7b. Flogging both the market and the law of larger numbers should be truly convincing for investors.
Exactly like Microsoft vs. the U.S. in the ’80s, Alphabet possesses the firepower to defend its’ interests in Europe, regardless of the EC. Just how much economic activity does Alphabet bring to the EU anyway? Google is the search/ad hand that feeds European commerce.
Alphabet Investor Relations:
Catch all the specifics of our Alphabet position on our Portfolio page tab above right. In addition: Early last year Ruth Porat left Morgan Stanley to join Alphabet. Don’t miss current Alphabet/Google CFO Ruth Porat adopts the Luchador life to clean-up the party in “Other Bets.”
“How Many Stars in Constellation Google?”