We recently published a list of 10 Stocks with Consistent Growth to Buy. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOG) stands against other stocks with consistent growth to buy.
Currently, financial markets are experiencing a mix of optimism and caution as investors react to changing economic conditions. Many are closely watching trends and data that could impact future growth and stability.
Tom Lee, managing partner and head of research at Fundstrat Global Advisors, recently shared his insights on the current market trends during an interview on CNBC’s ‘Squawk Box’ on October 14. He acknowledged that he underestimated the strength of the market, noting that it has been surprisingly resilient despite expectations of volatility leading up to the 2024 election. Lee highlighted that there is a significant amount of cash—about $6 trillion—sitting on the sidelines, which has contributed to the market’s stability. He observed that many investors had anticipated a recession, but instead, companies have shown strong earnings and resilience.
Lee also mentioned that the Federal Reserve is likely to adopt a supportive stance as inflation data continues to trend toward their 2% target. He believes that regardless of who wins the upcoming election, stocks are likely to perform well in the following year. Lee pointed out that markets tend to thrive on visibility and certainty, suggesting that if one candidate appears to be gaining an advantage, it could lead to a more favorable trading environment before the election. Overall, he remains optimistic about the market’s outlook.
S&P 500 and Dow Reach New Heights Ahead of Election Season
On October 18, both the S&P 500 and the Dow Jones Industrial Average reached new record highs, marking six consecutive weeks of gains for these major indices. As reported by CNBC, the S&P 500 rose by 0.40%, closing at 5,864.67, while the Dow rose by 0.09% and added 36.86 points to close at 43,275.91. The Nasdaq also performed well, increasing 0.63% to close at 18,489.55. This marks the longest winning streak of the year for both the Dow and S&P 500, with notable increases in their overall performance.
As earnings season progresses, over 70 companies in the S&P 500 have reported their results, with about 75% of those companies surpassing expectations. Despite potential market volatility leading up to the upcoming election, some analysts believe that stocks may continue to rise through November.
Rob Williams, a chief investment strategist at Sage Advisory, noted that this trend is unusual for an election year, where markets typically hesitate before improving post-election. He suggested that investors might be optimistic about a possible victory for Republican nominee Donald Trump, whose policies are seen as more favorable for businesses in terms of regulations and taxes.
Methodology
To compile our list of the 10 stocks with consistent growth to buy, we used the Finviz and Yahoo stock screeners. We sorted our results based on market capitalization and picked the top 30 stocks.
Next, we focused on identifying stocks that had demonstrated consistent growth. From the initial list, we narrowed our choices to stocks that have grown their revenue positively over the past 5 years. We further refined our selection to include only those that had positive revenue growth each year in their last five reported annual revenues.
To ensure the reliability of our findings, we consulted reputable sources such as SeekingAlpha, which provided insights into the revenue CAGR over the past five years, and Macrotrends, which offered information on historical annual revenue data. Finally, we have ranked the 10 stocks with consistent growth to buy below in ascending order based on their five-year revenue CAGR.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Larry Page
Alphabet Inc. (NASDAQ:GOOG)
5-Year Revenue CAGR: 17.23%
Number of Hedge Fund Holders: 165
Alphabet Inc. (NASDAQ:GOOG) is a leading technology company that is best known for Google, the world’s largest search engine. The company has expanded its business to include a wide range of services and products, such as online advertising, cloud computing, software, and hardware. Alphabet invests heavily in innovative technologies, including artificial intelligence (AI) and autonomous vehicles through its subsidiary Waymo. The company offers a wide range of products and platforms. These include Gmail, Google Search, YouTube, and Google Maps, as well as hardware like Pixel phones and smartwatches.
The company is actively pursuing growth through its innovative strategies and strong performance in various sectors. In Q2 2024, Alphabet Inc. (NASDAQ:GOOG) reported impressive consolidated revenues of $84.7 billion, marking a 14% increase year-over-year. Search was the largest contributor to revenue growth. A significant milestone was achieved with Google Cloud, which surpassed $10 billion in quarterly revenue and generated $1 billion in operating profit for the first time. Alphabet’s investments in artificial intelligence (AI) are paying off, with over 2 million developers utilizing its AI infrastructure and generative AI solutions, further solidifying its position as a leader in the tech industry.
Alphabet Inc. (NASDAQ:GOOG) is also enhancing its core products, such as Google Search and YouTube, by integrating advanced AI features. For instance, the introduction of a Google Search feature, AI Overviews, has improved user satisfaction and engagement, particularly among younger users. YouTube remains the top streaming platform, with views on YouTube Shorts and Connected TVs more than doubling over the past year.
Alphabet Inc. (NASDAQ:GOOG) ranks among the top 5 on our list of stocks with consistent growth to buy. Over the past five years, the company has grown its revenue at a compound annual growth rate (CAGR) of 17.23%, while its net income has increased at a CAGR of 20.33% during the same period.
These achievements and strategic initiatives make GOOG a compelling stock for investors looking for long-term growth potential. Analysts are bullish on Alphabet Inc. (NASDAQ:GOOG) and the 12-month median price target set by analysts indicates a potential upside of 24% from the current stock price.
Overall, GOOG ranks 5th on our list of stocks with consistent growth to buy. While we acknowledge the potential of GOOG, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.