Google (Alphabet Inc) may be at its highest price yet – just north of $800 per share – but that doesn’t mean it’s something you should stay away from. There are plenty of signs and indicators that say Google is nowhere near peaking.
Four Reasons Google is a Go
Buy low and sell high is the adage, which is why so many new investors are steering clear of Google. After all, it doesn’t make a whole lot of sense to invest in GOOGL when it appears to be peaking
But what if Google isn’t peaking? What if this is only the beginning and we’re looking at even more growth in the coming months and years? If you read between the lines, this growth seems imminent. Here are a few reasons why:
- New Corporate Structure
When Google restructured and turned into Alphabet, the decision had a significant impact on the overall level of leadership and human capital at the company. The structure provides more opportunities in various departments, which has already turned some heads.
“It creates headroom for talented executives such as Google CEO Sundar Pichai, Tony Fadell of Nest [a smart thermostat property] and YouTube’s Susan Wojcicki,” Columbia Business School professor Rita McGrath says. “They might get restless if they perceive they’ve been steamrollered by the success of the cash-printing machine that is Google’s advertising business.”
Plus, at the top of the structure, you have Larry Page and Sergey Brin, two of the most impressive and progressive minds in the entire tech world. That’s always a positive.
- Product Diversification
While the search conglomerate still hasn’t successfully dipped its toes into other waters in any significant manner – Google Glass was a failure – Google is clearly trying. From stratospheric Wi-Fi balloons and self-propelled vehicles to drone deliveries and virtual reality experiences, Google is always looking for opportunities to stake a claim in the next big thing.
- Commitment to Innovation
Google doesn’t just diversify and pursue new products – they work hard to ensure that each product they develop is continually innovating and evolving with the times. Their goal is for each of their products to trounce the competition with unique features and value-adds that are worthwhile.
Take Gmail as an example. What was once a standalone platform now seamlessly integrates with Google Apps to form the G Suite. And recently, they’ve innovated even more, enabling native encryption and extensive admin tools that help forward thinking companies enjoy stronger protection.
If you see a company investing in meaningful innovation – not just new developments for the sake of staying relevant – this is a clear sign that the future is stable.
- Long-Term Performance
Very few companies have pockets as deep as Google. They can seemingly do anything they want, throw money in any direction they please, and still have a profitable quarter. In 2015, they spent a whopping $3.5 billion on “other projects” and still had a fantastic year.
If you can find a company that’s so financially stable that it can spend billions on R&D and still turn a profit, that’s a company you want to be a part of. Even if they only hit on a fraction of their “projects,” you can be sure that something positive is coming down the pipeline.
Putting It All Together
At the end of the day, Google’s hefty price tag shouldn’t scare you away. If anything, the steady growth the company has experienced over the years – more than doubling in value since 2012 alone – is an indication that the company isn’t going anywhere in the near future. Discuss your options with a financial advisor and see whether it makes sense to take a second look at Google.