Pro Picks: GOOGL on Top in Q2, Plus 3 More Champs with Plenty of Juice Left
As earnings season kicks into high gear, we at InvestingPro are on the prowl for particularly stalwart companies set to issue their quarterly numbers this week — those that look primed for growth regardless of whether they surpass Wall Street expectations in this particular quarter. And for that, we’ll check in on the InvestingPro financial health rating, which helps us find the mightiest companies in a given sector.
We’ve found 4 VIP Pro Picks that pass muster, including the ubiquitous Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG).
Well, Google operator Alphabet has clinched a superb “Great Performance” InvestingPro health score of 3.33 out of 5.0 — and a drill-down into its numbers reveals why.
Critically, the search giant yields a high return on invested capital: its two-year average is at 23.8%, in the 95th percentile for its sector. Its profit margins are wildly healthy, outperforming the vast majority of peers, and it holds more cash than debt on its balance sheet. On the subject of cash flow health, the company is in the cream of the crop for its sector for cash flow to liabilities and cash flow to total debt, as well as its interest coverage ratio.
And as far as share performance goes, Alphabet’s five-year total return is at 106.5% — in the 96th percentile for tech, as InvestingPro data shows.
And analysts overwhelmingly call the stock a buy. Case in point: Stifel just recently stamped the stock with a Buy rating in March, saying that they expect consumer behavior to continue favoring Alphabet despite Microsoft’s recent foray into AI. In May Morgan Stanley said Google is leading in the AI assistant race.
Looking ahead to this week’s earnings, BofA — which also has a Buy rating on GOOGL — just predicted that the company
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