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Google Stock Seems Pretty Cheap Versus The Overall Market

As volatile as it’s been lately, it’s probably not a bad stock to hide in as the economy and markets turn down

(Not intended to be investment advice. Opinions are my own. I do own shares in GOOGL.)

The past month or so has not been friendly to Google shareholders (I’m one of them). It’s down about 20% from its February all time high. Part of that is because of the overall market selloff (thanks Trump). But Google has also been selling off since its last earnings report when it reported decelerating growth in its cloud business (GCP) and higher CAPEX (AI related).

But when you step back and consider two things, Google seems like a pretty decent investment:

1. At 19 times forward earnings, Google looks really cheap versus the broader market. The S&P 500’s forward P/E ratio is 21. This means that Google now trades more cheaply than the average company in the S&P 500 (note that the average is calculated using market cap based weights as opposed to a simple average).
2. But Google is of far higher quality than the average company in the S&P 500. It’s one of the most financially strong and profitable companies in the world. And it’s still growing.