Alphabet Inc (NASDAQ: GOOGL) is down big this year as the fear of rising rates keep investors away from the mega-cap technology names. Still, it’s a top pick at Diamond Hill Capital Management.
Brilliant’s bull case for Alphabet Inc
Down nearly 25% year-to-date, Heather Brilliant (Diamond Hill CEO) dubs Google an attractive buy for the long-term investors. Explaining why on CNBC’s “Squawk Box”, she said:
I do [thinks that Google has a moat]. The network effect is the most powerful source of competitive advantage. And Google is a great example of benefitting from having a moat that came from the network effect.
In April, the tech giant reported its financial results for the first quarter that came in shy of Wall Street estimates. The stock currently trades at a PE multiple of 20.62.
Why else does she like Google stock?
Other reasons Brilliant cited for her constructive view on Alphabet stock include a solid balance sheet. She expects Google to maintain its rapid growth in the coming years.
[Google has] a net cash balance sheet and we’re expecting it’ll continue to grow at least more than twice the rate of the overall economy. So, it’s a company that’s gotten punished by the re-rating that’s happened due to the higher interest rates.
Earlier this year, Alphabet said it will buy Mandiant Inc for $5.40 billion to expand its footprint in cybersecurity. The multinational is set to buyback $70 billion worth of its stock in fiscal 2022.
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