Title: Smartest Growth Stock to Invest in with $200 Today
The current market surge kicked off in October 2022, sparked by whispers that the inflation crisis was nearing its end. Despite some warning signs suggesting a major market correction could be imminent, others argue we've got another year, if not more, of gains ahead on Wall Street.
The market atmosphere is positively buzzing lately. As of December 9, the Dow Jones Industrial Average (^DJI) has climbed a remarkable 18% this year, and the S&P 500 (^GSPC) has chalked up a 27% increase. The tech-driven Nasdaq Composite (^IXIC) has soared a staggering 32% during the same period.
It's understandable that you might have concerns about buying growth stocks right now. If the bearish market indicators prove correct, growth stocks could be in for a rough ride during the upcoming correction.
But what if I presented you with a growth stock that has the guts to weather any storm, bouncing back with even greater returns on the other side? It doesn't matter if the market is smack dab in the middle of a relentless bull run or teetering on the brink of a broad market shift – it's always a sound decision to invest in Alphabet (GOOG -0.63%) (GOOGL -0.70%). If you're the patient type, any sum – whether it's $200 or any other amount – can be earmarked for an Alphabet investment.
Why is Alphabet invincible?
Alphabet, the dynasty that birthed Google, boasts several recession-proof qualities:
- The Ironclad Balance Sheet: With a whopping $93.2 billion in cash reserves and short-term investments, and a relatively minuscule $12.3 billion in long-term debt, Alphabet could keep its business afloat if it ran at a significant loss for years, without causing a financial crisis.
- Profitability Worthy of Royalty: Alphabet's bottom line is impressively robust. Over the past four quarters, it amassed a jaw-dropping $55.8 billion in free cash flow, against backdrop revenues of $340 billion. That's even during a year when the company funneled billions into hardware for its AI services.
- Businesses That Can't Be Toppled: Its mainstays, Google Search, Android, and YouTube, are remarkably sturdy. Even during economic downturns like the 2008 subprime mortgage meltdown or the 2020 coronavirus pandemic, they experienced growth slowdowns but never retracted altogether.
- Revenue Diversification: Google Search accounted for 57% of Alphabet's revenues in the latest quarterly report, decreasing slightly since the previous year. Meanwhile, the cloud computing platform, Google Cloud, is on an upward trajectory in terms of revenue share. In other words, Alphabet's revenue streams are becoming more diverse by the minute.
- A Flexible Fortress: In the face of market disruptions, Alphabet can roll with the punches. Whether online ads become obsolete, people decide they've had enough of them, or a new type of web advertising takes center stage, Alphabet can adapt by tapping into its subsidiaries, like Waymo self-driving taxis, Verily medical research, and Google Cloud.
Alphabet's performance in past downturns
Alphabet often delivers impressive Wall Street returns during tumultuous times:
- The Great Recession (2008): In 2008, when the subprime mortgage crisis hit, Alphabet's stock suffered alongside the rest of the market. But it recovered at a faster pace, returning to its pre-crisis levels within half the time it took the S&P 500.
- The Oil Slump (2015): In 2015, when global economic concerns—such as low oil prices and the Chinese economy's woes—sparked a sideways movement in the S&P 500, Alphabet capitalized on the situation, finishing the year with a 47% gain.
Balancing risks and rewards in Alphabet
Alphabet's structure is designed to adapt to changing markets. If the next global, or regional, crisis pulls the economy in a new direction, Alphabet will undoubtedly follow suit. When new market needs arise, Alphabet's subsidiaries will be there to meet them, in turn bolstering the company's growth.
It's not necessarily the safest investment in uncertain times, and the stock may plunge during downturns. But it's one of the least risky growth stocks on the market, offering impressive returns during bull markets as well. Striking that delicate balance between limited risks and attractive bull-market rewards, Alphabet is hard to beat in terms of both online and offline potential.
And there's more: Tying your money to a single Alphabet share costs around $180 these days, and the stock hasn't kept pace with the broader market in recent months. It currently trades at 23 times trailing earnings and 6.4 times sales, making this growth stock a bargain compared to other high-growth tech picks.
In conclusion, Alphabet is an attractive investment option if you've got $200 (or any other amount, depending on your broker's fractional share policies).
Despite the potential market correction warnings, some analysts still anticipate continued gains for the stock market in 2023. In this context, investing in recession-proof stocks like Alphabet can offer a hedge against market volatility. With its robust balance sheet, diverse revenue streams, and impressive financial performance during past downturns, Alphabet remains a sound investment option for those seeking balanced risks and potential rewards.
