Expert opinion: ‘Google is just outrageously cheap right now’
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May 12, 2022
The FBB Capital expert made a bull case for the stock on CNBC Power Lunch.
Shares of Alphabet Inc are down roughly 23% versus the start of the year.
Apple, Microsoft, and Google – all three still have fundamentals in good shape despite a challenging operating environment. But the one that particularly pops out to Mike Bailey, is Alphabet Inc (NASDAQ: GOOGL).
Bailey likes Google from the valuation standpoint
The fear of aggressive rate hikes is keeping investors away from high-flying tech stocks in 2022. Still, the FBB Capital Partners’ director of research said on CNBC’s “Power Lunch”:
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Google is just outrageously cheap. Last time its PE value was this cheap was nine years ago amidst taper tantrum. The business slowed down a bit this year, but then back to mid-to-high-teens earnings growth. And you’re paying a 17 multiple for that.
In April, Alphabet Inc blamed macro headwinds for a dramatic slowdown in YouTube ad revenue growth that had it report weaker-than-expected results for its fiscal first quarter.
Google’s fundamentals remain strong as well
Down 23% versus the start of the year with a multiple of 17, Bailey dubs Google the best pick for investors interested in playing the FAANG stocks. Speaking with CNBC’s Kelly Evans, he noted:
Apple, Microsoft, and Google are starting to get cheap and have their businesses in good shape. But Google’s valuation is jumping out to us as a pretty good opportunity. It’s seeing the best fundamentals and deepest discount in terms of valuation.
Also on Thursday, Alphabet CEO Sundar Pichai said inflation, the Ukraine war, and sluggish economy are likely to remain a challenge for the tech titan this year.
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