Tech giant Google (Alphabet) has heavy involvement in AI, an area in which we are excited about for the future as machine learning is really showing its true power with apps like chat GPT. As such we feel there is potential for investments in AI and would like exposure in this industry as it develops.
As the stock appears to be trading down -37% off the highs from 2022, we have used a Price to operating cash flow comparison to show the how the market price has tracked the OCF projections relatively well until now. We can see in (fig.1), there is sizeable convergence in the data pointing towards a significant undervaluation in the stock. If history repeats itself, we can expect to see the share price climb once again in line with OCF projections.
Price to operating cash flow comparison (figure. 1)
From a technical perspective, the stock is showing signs of a bottom after breaking the first daily swing high around $102, the MACD weekly and daily are showing 'buy' signals therefore if we can hold support at $83, this will enforce confidence in the long play (particularly for leveraged positions)
For those buying ordinary shares, consider holding longer term until financials rebalance themselves in the market and the share price is reflective of the strong position.
Daily candlestick chart (MACD, 200 MA)
Strategy:
Buy at current market price $94
Stop losses (for leverage positions) $84
Targets $125 / $149 / $200
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