Valuations indicate Alphabet Inc. (NASDAQ:GOOG) could be in GOOGL’s way

Valuations indicate Alphabet Inc. (NASDAQ:GOOG) could be in GOOGL’s way

Valuations indicate Alphabet Inc. (NASDAQ:GOOG) could be in GOOGL’s way

Despite this threat, I would argue that the most significant danger to GOOGL stock is Alphabet itself. Part of this shows up in its finances. In past articles, I have argued that GOOGL needs to begin paying a dividend. The company maintains a $780 billion-plus market cap and holds more than $109 billion in cash, yet the dividend remains at zero. This closes GOOGL stock off to large numbers of income-oriented investors who might otherwise show interest in the equity.

Moreover, Alphabet stock trades at a forward PE ratio of 20.6. This compares to Amazon which trades at 41.3 times earnings. I think one reason for this disparity revolves around Amazon’s superior ability in unlocking its value. GOOGL stock has become a prominent example of the sum of the parts holding a much greater value than the whole. For example, Morgan Stanley(NYSE:MS) analysts value Waymo as high as $175 billion. This makes the size of one non-core division 22% of the market cap of Alphabet stock. Given this reality, one has to wonder if GOOGL should spin off Waymo and other subsidiaries?

To a degree, I understand why GOOGL stock holds on to these divisions. The percentage of ad revenue will probably continue to fall over time. For this reason, Alphabet needs to innovate and lead in other tech-related endeavors to maintain its growth rate. However, until it spins off some divisions, Waymo and other subsidiaries could struggle to realize their real value. Hence, I think GOOGL needs to sharpen its focus and set the rest of its divisions free.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 1,206.19.

The projected lower bound is: 1,094.17.

The projected closing price is: 1,150.18.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 84.8717. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 13 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.33. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 95 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 230.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 16 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

Rex Takasugi – TD Profile

ALPHABET INC C closed up 6.810 at 1,147.800. Volume was 19% below average (neutral) and Bollinger Bands were 43% narrower than normal.

Open High Low Close Volume___
1,146.9901,158.2801,130.6901,147.800 1,446,047

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1,118.90 1,082.42 1,123.02
Volatility: 17 34 32
Volume: 1,289,200 1,625,505 1,622,064

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ALPHABET INC C is currently 2.2% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of GOOG.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on GOOG.O and have had this outlook for the last 0 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

You must be logged in to post comments :  
CONNECT WITH