It’s been a tough week for Google as far as the news goes. Headlines about lawsuits and software crashes, and even a riff with another tech-giant Apple for texting standards are all making noise. As you can imagine, this news has investors scrambling – but, our system still rates Google a buy. There are 4 reasons why – and we’ll explain them in-depth for you below. First, let’s take a look at what the fuss is all about.
The Department of Justice is on the brink of finalizing years of work preparing a lawsuit against Google. The claim is that Google has created a monopoly in the digital advertising market. The DOJ’s antitrust division is – according to those close to the situation – going to be ready to sue Google as early as September of this year. While Google does make up the largest portion of the U.S. digital advertising spending at 28.6%, they’re not too far ahead of Facebook – a company that sits at 23.8%. And, this isn’t the first time the DOJ has aimed its sights at Google – they sued the tech company back in 2020 for similar reasons.
More recently, Google had to issue an apology as their software update caused a major international outage Tuesday afternoon. This caused problems not just with search – but in Gmail, Google Images, Google Maps, and other sister platforms. This caused a huge uptick in users resorting to alternatives for the afternoon – Bing and DuckDuckGo.
Tune Out the Noise – 4 Reasons Google is Rated a Buy in VectorVest’s System
These negative headlines raise concern among investors about their positions in Google – especially ahead of the pending DOJ lawsuit. Is this concern substantiated? At VectorVest, we believe in trading without emotion – and our system helps you do just that by relying on sound stock analysis principles and innovative rating systems. There are four reasons why VectorVest still rates Google a buy – despite the negative press.
- It’s Slightly Undervalued: a huge principle behind our investing strategy at VectorVest is to buy undervalued stocks with ample momentum pushing their price up. While Google’s current price is $120, we value it higher – at $130. While the difference between value and reality isn’t much, it’s a positive signal nonetheless.
- Google’s Upside Potential is Pretty Strong: Our RV (Relative Value) rating is an indicator of long-term price appreciation potential. And on a scale of 0.00-2.00, we’ve rated Google’s RV a 1.47 – far above average.
- Forecasted Earnings Growth Rate is Excellent: Another metric we rely on to assess the potential of company stock in the future is the forecasted earnings growth rate. Over the next three years, Google has a forecasted earnings growth rate of 25% – which is excellent.
- It’s Relatively Safe: Similar to RV, RS (relative safety) sits on a scale of 0.00-2.00 – and currently, Google sits at 1.39 – which indicates the stock is relatively safe. This rating assesses risk through an analysis of the consistency and predictability of a company’s financial performance – along with business longevity, price volatility, sales volume, and more.
Taking these four factors into account – along with many others – our stock analysis system have rated VectorVest a buy with a VST (Value, Safety, Timing) rating of 1.33 – which is very good on a scale of 0.00-2.00. This is despite a negative news cycle and a below-average comfort index (CI).
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for Google, it is safe, it shows great long-term upside potential, and the timing is good.
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